By Nicholas P. Brown and Juveria Tabassum
May 21 (Reuters) - Target, looking for a path out of a long sales slump, is zeroing in on young families to build a loyal customer base among consumers who in recent years have moved towards low-price competitors like Walmart and TJX.
The retailer sees a potential edge for itself by hooking new parents, and keeping them coming back as their kids get older. If Walmart is the consensus one-stop shop for families' daily needs like milk, bread and diapers, Target
says it wants to be the place those families go for more personalized items such as baby clothes, toy sets and vitamin regimens.
The company, which on Wednesday reported strong earnings for the first time in a year, has added 2,000 items to its baby category this year, with a focus on busy families, Cara Sylvester, Target's chief merchandising officer, said on a conference call after the release.
Target's sales climbed 5.6% year-over-year and it doubled its net sales growth forecast to 4%, while new CEO Michael Fiddelke is investing $2 billion toward sprucing up the product mix, remodeling stores and boosting store payrolls.
Retailers nevertheless are facing stiff headwinds as the Iran war has fueled inflation and left consumers skittish. Target's shares fell 5% after the earnings announcement.
"I continue to expect share losses in some of these categories, like apparel and home, as competition remains quite strong," said Mari Shor, senior equities analyst at Target shareholder Columbia Threadneedle.
Target has expanded its toy assortment, while adding 1,500 health and wellness products, including family-oriented items such as First Day vitamins for kids and teens, and Tubby Todd baby body lotion.
"Attempting to build a relationship with busy families could prove to be helpful in re-establishing a longer-term relationship with their customer base," said Morningstar analyst Brett Husslein.
In recent years, Target has not been the go-to destination for any one product or consumer class, Husslein said, losing cost-conscious shoppers to retailers like Walmart while drawing little business from younger, wealthier consumers looking for apparel and accessories.
People tend to become more price-conscious - and value the convenience of one-stop shopping - once they have kids, according to a 2025 survey by 84.51, a retail analytics company owned by Kroger Co.
Fiddelke, whose appointment last year was met with skepticism, said in a call with media this week that Target's turnaround requires a combination of "style, design and value."
In the early going, Fiddelke has shaken up company leadership, including by hiring ex-Walmart executive Jeff England to run Target's supply chain.
Target's new baby products run the gamut from inexpensive items such as private-label baby wipes, food and shampoo, to high-end brands like Bugaboo, whose strollers can cost more than $2,000.
The company has launched "baby boutiques" in 200 stores, where parents can test-drive strollers, view bassinets out of their packaging and talk with shopping experts.
With Walmart still a generally cheaper option, Target's success "will be vitally dependent on its ability to consistently execute ... through store experience and merchandise assortment," Husslein added.
(Reporting by Nicholas Brown in New York and Juveria Tabassum in Bengaluru; Editing by Peter Henderson)
