Can Target’s New Deal With Kendra Scott Boost Its Holiday Season?

Last week, Target struck a long-term strategic deal with Kendra Scott to carry an exclusive jewelry collection of earrings, necklaces, and more. Plans include debuting this jewelry online and at approximately 150 stores as the 2023 holidays approach, according to CNBC.

This comes as a surprise for many reasons and begs the question, will this help or harm Target? 

Kendra Scott and her brand have been the center of numerous controversies over the last several years, and “the cheap chic retailer has struggled with slower sales and public backlash in recent months.”

According to Texas Monthly, Scott is “a recurring investor on Shark Tank, the reality TV show for entrepreneurs, and is the founder of the Kendra Scott Women’s Entrepreneurial Leadership Institute at UT Austin.” Last year, she also created the "Direct Retail by Kendra Scott" program, a direct-sales platform that came under fire from consumers who accused it of being a multilevel marketing scheme.

When Texas Monthly reached out for an interview, a company representative stated, "At Direct Retail by Kendra Scott, we are not an MLM. Family, Fashion, and Philanthropy are at the heart of what we do and the reason why we created this program: to empower female entrepreneurs."

Kendra Scott's new partnership may stem from how “Target shoppers have pulled back on buying clothing, home decor and other discretionary items while they spend more on experiences and pay higher grocery bills because of inflation.”

Additionally, Target alerted investors of an imminent dip in profits as they tackled excess inventory through markdowns and order cancellations. This action has further impacted the company's already faltering stock, which closed at $155.98 at the time of the announcement, down 2.31%.

In late August, the stock reached a 52-week low. CEO Brian Cornell acknowledged the inventory challenges and the public backlash over their recent Pride merchandise in a CNBC interview. Additionally, organized retail theft has been a persistent drain on profits. Following these challenges, Target adjusted its annual forecast, now expecting a decrease in comparable sales and earnings per share of $7 to $8.

The Collector reported that Target has been utilizing designer brand collaborations since the early 2000s. The 2002 fashion collaboration with Isaac Mizrahi was able “to bridge that gap of making clothing with the appearance and style of high-end clothing but at a price that most people could still afford.”

Target encapsulated the notion that shoppers could expect affordable high-end fashion, and “ever since, there have been collaborations between Target and other designers including Lilly Pulitzer, Jason Wu, Zac Posen, Altuzarra, and Phillip Lim.”

As noted by Jewelry Shopping Guide, Kendra Scott’s brand is "synonymous with affordable and stylish jewelry. The jewelry collections are crafted with natural materials like gemstones, pearls and shells, as well as glass stones and lab-grown pieces, making luxury pieces affordable.”