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Target Tones Down Presentation for Holiday

Target, famous for its design energy, is looking a little sleepy this holiday season, retail analysts said.

Target, famous for its design energy, is looking a little sleepy this holiday season, retail analysts said.

This story first appeared in the December 20, 2007 issue of WWD.  Subscribe Today.

The retailer festooned its stores last year with Dutch designer Tord Boontje’s paper lace snowflakes and coordinating merchandise. There were cherry-red gift boxes at every corner and aisles sprinkled with cashmere scarves, diamond-studded Hello Kitty necklaces, beaded evening bags and other limited edition luxuries.

This year, in contrast, it’s holiday candy and the $1 bins at front. Even the designer goods on the floor — Hollywould for Target accessories and Erin Fetherston — aren’t new for holiday, but are the latest installments of existing programs.

“The pullback is probably appropriate,” said Citigroup analyst Deborah Weinswig. “Management has been saying since the first quarter they anticipated a slowdown in the second half.”

Weinswig said she would have liked “more innovation” in product and expressed concern that the retailer’s private brands — Merona, Xhilaration, Mossimo and Isaac Mizrahi — are starting to look too much alike.

“I’m not sure why it happened, but the sense of distinction is not there,” she said.

Target blamed disappointing third-quarter earnings, in particular, on soft sales of high-margin apparel and, to a lesser extent, home decor. Apparel and accessories account for 22 percent of Target’s overall revenues.

“The current consumer environment and economic climate is somewhat more challenging than earlier in the year,” chairman and chief executive officer Robert J. Ulrich said on a Nov. 20 earnings call. He said the retail landscape was not more promotional than usual and that the Minneapolis-based retailer remained confident in its overall strategy.

Mandy Putnam, vice president of TNS Retail Forward, said two Target stores near her office lacked their usual pizzazz.

“You’d barely even know it was holiday,” she said. “You walk in and you’re not getting a big gift statement at front or compelling message in terms of holiday apparel.”

Target’s biggest holiday statement was a seven-day promotion after Thanksgiving called “Wow or Never,” where purchase of an item, for instance a $99 Isaac Mizrahi trench, gave shoppers chances to win more extravagant items such as a free fitting for a couture dress in Mizrahi’s studio.

But Robert Passikoff, president of research firm Brand Keys, said in a tough economy it may be best not to place big bets on “hot” items and to let the consumer choose her holiday plan.

“I think that’s wise,” he said. “To a certain degree you allow the marketplace to set the boundaries and requirements.”