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Target hatches a billion dollar plan to challenge Nike and Under Armour

Brian Sozzi

File this one in the drawer called: should have seen this coming.

On Thursday, Target (TGT) put to bed months of speculation on Wall Street it would join forces in 2020 with Nike (NKE), Adidas or Under Armour (UA) for a cheap chic collection of athletic clothing. Instead, Target will do what it does best — utilize its best in class private label supply chain and try to make a splash on its own.

Later this month Target will debut a new athleticwear brand dubbed All in Motion. It’s a private label collection that spans T-shirts, tank tops, polo shirts, pants, leggings, sports bras, swimwear, yoga mats and hand weights. Prices for the tops, shorts and leggings are typical Target, ranging from $3.99 to $69.99.

No footwear, yet.

One could expect Target to hype up the attributes of the clothing in stores and online — Target says the apparel features technology (see stretch materials) comparable to premium activewear brands. The company also noted the majority of the products boast sustainably sourced materials (memo to disposable fashion king Zara — this can be done).

Target believes All in Motion could be a billion dollar sales brand in the first year of availability.

“It’s an important category for us,” Target CEO Brian Cornell said of activewear in an interview with Yahoo Finance last month. Cornell added he thought the brand would “delight” Target shoppers.

Target Chairman and CEO Brian Cornell speaks to a group of investors, Wednesday, March 2, 2016, in New York. Target’s annual meeting comes as the discounter is making progress in reinvigorating its business and winning back shoppers under Cornell, CEO since August 2014. (AP Photo/Mark Lennihan)

For Target’s investors still riding high after a big 2019 (hence, Target was named the Yahoo Finance Company of the Year), the news could be viewed as another positive.

All in Motion joins a private label brand portfolio at Target that now numbers 40-plus, including successful launches of lifestyle kids brand Cat & Jack and recently launched food brand Good & Gather. Similar to Target’s other private label brands, All in Motion hopes to offer more attractive profit margins than a national brand product. That’s a positive for Target’s future earnings.

The only wildcard here is how All in Motion will manage to wrestle business away from Nike, Adidas and Under Armour. All three powerhouse brands have introduced cheaper versions of their products at department stores, online and even at outlet locations.

Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Watch The First Trade each day here at 9:00 a.m. ET. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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