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Target earnings: Private labels are working, but food is still a weak spot

Target plans to launch more than a dozen private label brands in the next three years.

Target Corp. is expected to report second-quarter earnings on Wednesday before the market opens.

UBS highlights Target’s TGT, +1.38% private label initiatives as a “bright spot.” During its analyst day in February, executives said the company would introduce more than a dozen private label brands in the next three years.

UBS notes that Cat & Jack, one of the company’s children’s’ brands, has been a “consistent double-digit comp contributor.” Target says the brand surpassed $2 billion in sales, about a year after launching.

“With four more exclusive brand introductions set for this fall, we believe Target should continue to see some tailwinds from private label,” analysts led by Michael Lasser wrote. “On the other hand, we think its food offering and in-stocks remain works in progress.”

With the company’s July announcement indicating same-store sales growth for the second quarter, UBS analysts say they’ll be looking at profits.

“Though we don’t think it would be a bad...


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