Target is slowing its introduction of private label brands, while Kohl’s is readying a new push to attract millennial customers.

“We have made a major commitment to ensure that we use our own brands to the point of differentiation, and that we bring style and quality at a great value, but the path we have been on, and the pace, is going to slow,” Target CEO Brian Cornell told investors at a meeting in Minneapolis as it reported quarterly results. “We are going to much more focused on managing those brands and building expertise into our teams, but we will continue to look for opportunities.”

The company says its Cat & Jack children’s apparel brand generates about $1 billion in annual sales, while its home goods category has grown from the single Opalhouse (home décor) label to include Project 62 (furniture) and the Hearth and Hand partnership with the “Fixer Uppers’” Chip and Joanna Gaines.

The private labels are a “key market share driver” for Target and “create a sense of authority” across multiple categories as more of them are introduced, Chief Merchandising Officer Mark Tritton said.

Target posted a “huge increase” in sales of toys and baby products in the year ended Feb. 2, due largely to the liquidation of Toys R Us and Babies R Us, Cornell said. And while expansion in toys resulted in Target’s annual gross margin declining to 25.7% from 26.1%, “that will moderate over time and the investment we made in growing the business will stabilize,” Cornell said.

Target will open 30 new stores annually for “the next few years” and focus on expanding its small (49,000-sq-ft. and under) store formats. It has about 100 small store locations and will add a dozen more this year including entries into Los Angeles and Washington, DC. It also will remodel another 300 locations, Cornell said.

Target’s net income declined to $799 million in Q4 ended Feb. 2, down from $1 billion a year earlier, which included a $343 million tax benefit. Target’s Q4 revenue was flat at $22.7 billion on a 2.9% same-store sales gain.

Kohl’s also is moving to smaller formats in taking a $104 million charge against Q4 earnings partly to close four large mall-based locations this spring. It also is subleasing space; Aldi recently opened the first of 5-10 locations carved out of Kohl’s stores. Kohl’s also has signed a similar agreement with Planet Fitness.

It also is expanding its selection of private label and exclusive brands with the launch this summer of Nine West apparel and footwear under an agreement with Authentic Brands Group. The Nine West plans come as the company seeks to attract more millennial customers to its stores with the introduction later this year of “Outfit Bar” sections at 50 stores in the Chicago and Philadelphia markets. The Outfit Bar will carry of Nike, Lauren Conrad, Levi’s, Adidas and Pop Sugar apparel as part of an assortment that will updated every 30 days, CEO Michelle Gass said in releasing earnings. Jonathan and Drew Scott, stars of the HGTV series “Property Boss,” also will launch “Scott Living by Kohl’s” sections in stores this fall featuring bedding, furniture and other products.

Kohl’s profit in Q4 ended Feb. 2 decreased 42% to $272 million as it took a $104 million charge partly tied to store closings. Revenue declined 3.3% to $6.8 billion, despite a 1% rise in same-store sales.

Contacts:

Kohl’s, Bruce Besanko, CFO, 262-703-7000

Target, Mark Tritton, Chief Merchandising Officer, 612-304-6073