Last week, the company slashed its forecast after another quarter of flagging sales and a big earnings miss. While Target was once known as a place where shoppers went for a few essentials and then left with a bunch of items they didn’t know they needed, years of disappointing sales and a deep stock rout point to a retailer that has lost its mojo.

“We’re not happy with where we are,” said Chief Commercial Officer Rick Gomez. “We want to get these businesses to growth.”

The $25 leggings are one answer to making it happen. Target is betting on them and a slate of other high quality, low-cost products to lure budget-conscious consumers into stores for the key holiday shopping season and reclaim its “cheap chic” image and Tar-JAY moniker.

The All in Motion athletic collection alone includes more than 700 items for adults and children, plus sporting goods such as yoga mats and jump ropes. Shoppers are increasingly making choices based on value, with some trading down to private labels and others trading up to premium products they think are worth a splurge.

Target is competing for dollars with brands like Walmart and Gap’s Old Navy, which are known for low prices. Both of those companies say they’re gaining market share with middle- and high-income consumers, a critical Target demographic.

To win those customers over, Target is cutting prices on thousands of items including groceries and pitching discounts through a new paid-membership program. It’s also marketing exclusive items like the official Taylor Swift The Eras Tour Book and merchandise inspired by the new Wicked movie, as well as partnerships with Ulta Beauty and Kylie Cosmetics.

But key to persuading holiday shoppers to spend more money at Target this season is getting its clothes and home accessories strategy right. Target gets nearly half of its sales from discretionary products, which have included tie-ups with designers like Lilly Pulitzer and Diane Von Furstenberg as well as hit trends like Stanley cups.

Over the past few years, though, Target strayed from its core basics to carry more fashion-forward and flamboyant clothes, says Karen Short, an analyst at Melius Research. Shoppers complained about weird cuts and colors and looks that were out of date. And as inflation raged and consumers cut back on non-essentials, Target’s sales suffered.

Now, Target is zeroing in on its more than 45 store brands that make everything from bath towels to underwear and account for more than $30 billion in annual sales, nearly one-third of total revenue.

Executives have said sales of these brands, which include All in Motion leggings, are outpacing the rest of the business. They’re attracting customers like Jordan Metzman.

The 26-year-old New Yorker recently splurged on a matching set of black Target leggings with white piping and a sports bra for $50.

She says she’d never drop $100 on a single pair of leggings — the cost of most high-end brands — but she liked the idea of having a matching workout set to wear at the gym, and Target’s price fit her budget.

“I like to have options,” she said. “Especially in New York, I feel like you’re trying to stay with the style.”

That’s exactly what Target was hoping for when it hatched the idea for $25 leggings.

The retailer set out to design leggings that could compete in quality and fashion with the likes of more pricey brands. Leggings by Lululemon Athletica Inc. or Vuori start at $98 a pair. Target wanted its leggings to be cheap enough that shoppers might throw other items into their carts as well.

The idea is to lure shoppers with inexpensive goods that punch above their weight and go after consumers willing to splurge on little indulgences, like new clothes, if they’re stylish and priced appropriately.

A round price like $25 is unusual and implies to consumers that something is a good value but not cheap, according to John Dinsmore, a professor of marketing at Wright State University.

“It’s easy, it’s simple. And it just says affordable,” Target’s Gomez said in an interview.

Once Target settled on a price point, two dozen of its material-science experts, engineers and researchers all got to work developing a fabric that would fit the budget and still be soft and opaque.

Working with suppliers, they tested a variety of options before settling on an interlock knit with 79% nylon and 21% spandex, a similar blend as Lululemon’s popular Align leggings.

Target asked thousands of product testers across the U.S. to try out the leggings while exercising and running daily errands like picking up kids from school. Their feedback persuaded the company to offer a wide range of lengths, as well as options with and without pockets. The company added tiers of prices, too. On top of the basic $25 pair, there are $28 “dynamic flex” leggings for more intense activities and a $30 option with more supportive fabric geared toward runners.

Target doesn’t break out sales of individual products, but the All in Motion collection is one of its biggest in-house brands. The company says it became a $1 billion brand in its first year after launching in early 2020. Target hasn’t broken out recent performance beyond saying sales have stayed above the $1 billion level.

There are many low-price leggings out there, including cheaper styles from Amazon.com Inc. and Costco Wholesale Corp.

“It’s not about being the least expensive leggings on the market,” said Jenny Breeden, Target’s senior vice president of product design and packaging, in an interview. “It’s about being the lowest-price quality leggings on the market.”

Big-box retailers like Target saw sales of women’s activewear bottoms rise 11% in the year ended in September, even as the overall category sales shrank 9%, according to data from Circana, a research firm.

For Andie Ambroziak, a paralegal in Chicago, Target is a “guilty pleasure.” She has been trying to cut down on her overall spending and turned to the All in Motion leggings when she was searching for a cheaper alternative to Lululemon.

She thought they were such a good value that she ended up buying two more pairs, plus a few sports bras and tennis dresses.

“Target lasts just as long as Lulu, and I’m paying less than half the price,” the 25-year-old said.