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Target Freshens Up Apparel, Home Amid Questions About its Overall Strategy

Target is retiring a few tried-and-true—but stale—house brands in favor of fresh concepts in women’s, men’s and home.

Buoyed by success in its kids’ department with the Cat & Jack collection, the Bullseye will debut four new labels this fall.

The launches will include: A New Day, a print-driven women’s wear line with a modern spin on classics; JoyLab an edgier, fashion-driven activewear collection; and—in an attempt to get men to think more than just underwear at its stores—Goodfellow & Co., a modernized classics collection for men that focuses on fabrics and fit. Project 62 is the company’s new furniture and home accessories concept.

As part of its three-year investment plan, in February Target announced it would debut 12 new private-label collections, with a combined sales forecast of $10 billion over the next two years. Last month, Target launched Cloud Island, a 500-piece baby brand.

[Read more about how traditional retailers are overhauling operations: Transformation Nation: A Comparison of Department Store Survival Plans]

Just as Cat & Jack replaced Cherokee and Circo, which had “overstayed their welcome” according to Mark Tritton, Target’s executive vice president and chief merchandising officer, swapping out Merona and Mossimo for the new collections is about positioning the company for the future not replaying underperformers.

“Take Cherokee and Circo in our kids’ business, for example—they were performing strongly, even in a difficult market,” Tritton said in the company’s blog. “But we talked to our guests, looked at the data, and we realized that there was this huge opportunity to create a unique personality and own-able, differentiated point of view.”

With Cat & Jack, the refresh was apparently a welcome one. The collection is on track to pull in $1 billion in sales for the first year, and unlike the brands it replaced, which were stagnant at single-digit same store results, the new label enjoys rising double digits.

With Walmart snapping up e-commerce pure-plays and Amazon shoring up its grocery game by swallowing Whole Foods, the new apparel launches come at a time when Target is under the microscope. While its competitors are making headlines with big, bold moves, the retailers’ attempts to freshen up stores and launch new labels aren’t nearly as newsworthy—or innovative enough to help it old its own, according to some analysts.

[Read more about how the Amazon/Whole Foods deal will impact retail: Amazon & Whole Foods: What’s Next for Retail?]

“Private labels are a good strategy but not enough,” Morningstar analyst John Brick told CNBC. “They should maybe continue on that path but also look for exterior angles.”

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Citi analyst Kate McShane agreed, telling the publication the company should be “aggressively increasing omnichannel capabilities through acquisitions.”

Target sales were down in the first quarter by 1.1% to $16 billion and comp store sales were down by 1.3%. To boost those numbers, Target is hoping to increase foot traffic. Kanter Retail reports that currently fewer than one in three households shop the chain each month.

Since it’s food, not fashion, that drives frequent trips to big boxes and convenience stores, experts say Target’s focus should be on groceries—an area that has been a soft spot in the company’s business.

But the Amazon/Whole Foods deal is likely to make gaining ground in this area even more challenging. It “is a significantly damaging competitive blow to Target,” Simeon Gutman, an analyst at Morgan Stanley told Bloomberg. “Whatever competitive pressures were out there before today are now accentuated with this move.”

Target, in particular, is vulnerable after the deal since one in four of its grocery consumers also shop at Whole Foods, according to research consultancy Magid.

Further, two-thirds of moms who shop at Target, are Amazon Prime members. To compete, the company is pushing convenience with it’s Target Run & Done marketing campaign and promoting its everyday low price message. It is also testing Restock, Target’s version of Prime Pantry.