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Target's Buzz Hits the Bullseye

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Target's (NYSE: TGT  ) reinvigorating its cheap-chic reputation by pulling discount fashion out of a style we'll call Recession Malaise. This week, the discounter unveiled a designer line that built so much buzz that a horde of eager shoppers crashed the company's website.

Although Target has been releasing exclusive designer collections at its stores lately, this week's release hit the jackpot and made headlines.The limited-edition Missoni for Target line hit stores Tuesday, purveying the high-end label's merchandise for a mere fraction of the hundreds (or even thousands) of dollars it usually commands at luxury retailers.

Demand surged beyond the discount retailer's expectations and capacity. Target said activity at its stores looked reminiscent of Black Friday, which pretty much says it all. At some stores, the Missoni articles sold out in minutes; voracious shoppers waited in long lines to make their purchases. Unfortunately, the fact that Target's website crashed created customer anger alongside the retailer's much-needed buzz.

That online crash is a definite downside for Target, which just recently stopped relying on (Nasdaq: AMZN  ) to handle its online orders. However, Target said the crash simply owed to the incredible demand for the Missoni merchandise, rather than its recent abandonment of Amazon.

Big, buzzworthy launches like this one will help Target compete against rivals like Wal-Mart (NYSE: WMT  ) , which has never been able to keep up with Target's cheap-chic attitude. It'll also help the chain stand out against small, fast-fashion retailers like Rue 21 (NYSE: RUE  ) and H&M.

Our recent economic woes have a silver lining, at least from Target's point of view: They encourage more consumers to trade down to Target instead of paying up at retailers like Nordstrom (NYSE: JWN  ) or Saks (NYSE: SKS  ) . And even affluent shoppers who can afford more sometimes crave a good deal.

Desperate Sears Holdings (Nasdaq: SHLD  ) shareholders were probably hoping that its Kardashian Kollection would inspire a similarly hyperactive, if not hysterical, customer response. Given few online indications of how the Kardashian line has fared last month, I've got to wonder whether the kollection kind of konked out.

Target's currently trading at a mere 12 times forward earnings, and a reasonable 1.1 PEG ratio. Much like its cheap-chic wares, Target's stock looks like a steal -- particularly if it can continue replicating the mad magic it delivered via Missoni for Target.

Target isn't Wal-Mart's only threat. Download the Motley Fool's special free report, "The Death of Wal-Mart: The Real Cash Kings Changing the Face of Retail."

Alyce Lomax does not own shares of any of the companies mentioned. The Motley Fool owns shares of Wal-Mart Stores. Motley Fool newsletter services have recommended buying shares of Wal-Mart Stores and Motley Fool newsletter services have recommended creating a diagonal call position in Wal-Mart Stores. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Related Tickers

10/21/2016 11:05 AM
TGT $67.80 Up +0.09 +0.13%
Target CAPS Rating: ***
AMZN $814.64 Up +4.32 +0.53% CAPS Rating: ****
JWN $53.64 Up +0.53 +1.00%
Nordstrom CAPS Rating: ****
SHLD $11.71 Down -0.18 -1.51%
Sears Holdings CAPS Rating: *
SKS.DL2 $0.00 Down +0.00 +0.00%
Saks, Inc. CAPS Rating: *
WMT $68.02 Down -0.71 -1.03%
Wal-Mart Stores CAPS Rating: ***