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The Hill
an hour ago
- The Hill
Target's COO will lead the struggling retailer when CEO Brian Cornell steps down in February
NEW YORK (AP) — Target CEO Brian Cornell, who helped reenergize the company but has struggled to turn around weak sales in a more competitive retail landscape since the COVID pandemic, plans to step down Feb. 1. Minneapolis-based Target Corp. said Wednesday that Chief Operating Officer Michael Fiddelke, a 20-year company veteran, will succeed Cornell. Cornell will transition to be executive chair of the board. Cornell, 66, took the helm at Target in August 2014. In September 2022, the board extended his contract for three more years and eliminated a policy requiring its chief executives to retire at age 65. Cornell said the appointment followed several years of board vetting of both internal and external candidates. Fiddelke has overhauled Target's supply network and expanded the company's stores and digital services while cutting costs. 'Mike was the right candidate to lead our business back to growth,' Cornell told reporters. 'As I arrived at Target, I consistently relied on Michael's strategic insights and sound judgment when making decisions. Michael has developed a deeper knowledge of our business than anyone I know.' Fiddelke told reporters he's stepping into the role with 'urgency' to reclaim the company's merchandising authority. 'When we're leading with swagger in our merchandising authority, when we have swagger in our marketing, and we're setting the trend for retail, those are some of the moments I think that Target has been at its highest in my 20 years,' he said. In May, Target announced that Fiddelke would lead a new office focused on faster decision-making to help accelerate sales growth. The change in leadership was announced Wednesday at the same time that Target reported another quarter of sluggish results. The company's stock was down more than 8% in pre-market trading. Target reported a 21% drop in net income in the quarter ended Aug. 2. Sales were down slightly and the company reported a 1.9% dip in comparable sales — those from established physical stores and online channels. Target has seen flat or declining comparable sales in eight out of the past 10 quarters including the latest period. Target, which has about 1,980 U.S. stores, has been the focus of consumer boycotts since late January, when it joined rival Walmart and a number of other prominent American brands in scaling back corporate diversity, equity and inclusion initiatives. Target's sales also have languished as customers defect to Walmart and off-price department store chains like TJ Maxx in search of lower prices. But many analysts think Target is stumbling because consumers no longer consider it the place to go for affordable but stylish products, a niche that long ago earned the retailer the jokingly posh nickname 'Tarzhay.' In fact, out of 35 merchandise categories that Target tracks, it gained or maintaining market share in only 14 during the latest quarter, Fiddelke told reporters Tuesday. Meanwhile, Walmart gained market share among households with incomes over $100,000 as U.S. inflation caused consumer prices to rise rapidly. Lower-income shoppers have driven customer growth at Target, suggesting it may have lost appeal with wealthier customers, according to market research firm Consumer Edge. 'It's probably not the best sign, especially because higher-income consumers continue to hold up a little bit better' during times of economic uncertainty, said Consumer Edge Head of Insights Michael Gunther. In March, members of Target's executive team told investors they planned to regain the chain's reputation for selling stylish goods at budget prices by expanding Target's lineup of store label brands and shortening the time it took to get new items from the idea stage to store shelves. The moves would help the company stay close to trends, executives said. 'In a world where we operate today, our guests are looking for Tarzhay,' Cornell told investors. 'Consumers coined that term decades ago to define how we elevate the everything everyday to something special, how we had unexpected fun in the shopping that would be otherwise routine.' Before joining Target, Cornell spent more than 30 years in leadership positions at retail and consumer-product companies, including as chief marketing officer at Safeway Inc. and CEO at Michaels, Walmart's Sam's Club and PepsiCo America Foods. He came to Target when the company was facing a different set of challenges. Cornell replaced former CEO Gregg Steinhafel, who stepped down nearly five months after Target disclosed a huge data breach in which hackers stole millions of customers' credit- and debit-card records. The theft badly damaged the chain's reputation and profits. Cornell reenergized sales by having his team rev up Target's store brands. It now has 40 private label brands in its portfolio. And even before the pandemic, Cornell spearheaded the company's mission to transform its stores into delivery hubs to cut down on costs and speed up deliveries. Target's 2017 acquisition of Shipt helped bolster the discounter's same-day, store-based fulfillment services. Cornell also focused on making its stores better tailored to the local community The coronavirus pandemic delivered outsized sales for Target as well as its peers as people stayed home and bought pajamas, furnishings and kitchen items. And it continued to see a surge in sales as shoppers emerged from their homes and went to stores. But the spending sprees eventually subsided. As inflation started to spike, Target reported a 52% drop in profits during its 2022 first quarter compared with a year earlier. Purchases of big TVs and appliances that Americans loaded up on during the pandemic faded, leaving the retailer with excess inventory that had to be sold off. In July 2023, as shoppers feeling pinched by inflation curtailed their spending, Target said its comparable sales declined for the first time in six years. Moreover, Target started losing its edge as an authority on style by focusing too much on home furnishings basics, and not enough trendy items, Fiddelke said. A customer backlash over the annual line of LGBTQ+ Pride merchandise Target stores carried that year further cut into sales. Although Walmart retreated from its diversity initiatives first, Target has been the focus of more concerted consumer boycotts. Organizers have said they viewed Target's action as a greater betrayal because the company previously had held itself out as a champion of inclusion.
Boston Globe
an hour ago
- Boston Globe
Target's COO will lead the struggling retailer when CEO Brian Cornell steps down in February
Cornell said the appointment followed several years of board vetting of both internal and external candidates. Fiddelke has overhauled Target's supply network and expanded the company's stores and digital services while cutting costs. Advertisement 'Mike was the right candidate to lead our business back to growth,' Cornell told reporters. 'As I arrived at Target, I consistently relied on Michael's strategic insights and sound judgment when making decisions. Michael has developed a deeper knowledge of our business than anyone I know.' Get Starting Point A guide through the most important stories of the morning, delivered Monday through Friday. Enter Email Sign Up Fiddelke told reporters he's stepping into the role with 'urgency' to reclaim the company's merchandising authority. 'When we're leading with swagger in our merchandising authority, when we have swagger in our marketing, and we're setting the trend for retail, those are some of the moments I think that Target has been at its highest in my 20 years,' he said. In May, Target announced that Fiddelke would lead a new office focused on faster decision-making to help accelerate sales growth. The change in leadership was announced Wednesday at the same time that Target reported another quarter of sluggish results. The company's stock was down more than 8% in pre-market trading. Advertisement Target reported a 21% drop in net income in the quarter ended Aug. 2. Sales were down slightly and the company reported a 1.9% dip in comparable sales — those from established physical stores and online channels. Target has seen flat or declining comparable sales in eight out of the past 10 quarters including the latest period. Target, which has about 1,980 US stores, has been the focus of consumer boycotts since late January, when it joined rival Walmart and a number of other prominent American brands in scaling back corporate diversity, equity and inclusion initiatives. Target's sales also have languished as customers defect to Walmart and off-price department store chains like TJ Maxx in search of lower prices. But many analysts think Target is stumbling because consumers no longer consider it the place to go for affordable but stylish products, a niche that long ago earned the retailer the jokingly posh nickname 'Tarzhay.' In fact, out of 35 merchandise categories that Target tracks, it gained or maintaining market share in only 14 during the latest quarter, Fiddelke told reporters Tuesday. Meanwhile, Walmart gained market share among households with incomes over $100,000 as US inflation caused consumer prices to rise rapidly. Lower-income shoppers have driven customer growth at Target, suggesting it may have lost appeal with wealthier customers, according to market research firm Consumer Edge. 'It's probably not the best sign, especially because higher-income consumers continue to hold up a little bit better' during times of economic uncertainty, said Consumer Edge Head of Insights Michael Gunther. Advertisement In March, members of Target's executive team told investors they planned to regain the chain's reputation for selling stylish goods at budget prices by expanding Target's lineup of store label brands and shortening the time it took to get new items from the idea stage to store shelves. The moves would help the company stay close to trends, executives said. 'In a world where we operate today, our guests are looking for Tarzhay,' Cornell told investors. 'Consumers coined that term decades ago to define how we elevate the everything everyday to something special, how we had unexpected fun in the shopping that would be otherwise routine.' Before joining Target, Cornell spent more than 30 years in leadership positions at retail and consumer-product companies, including as chief marketing officer at Safeway Inc. and CEO at Michaels, Walmart's Sam's Club and PepsiCo America Foods. He came to Target when the company was facing a different set of challenges. Cornell replaced former CEO Gregg Steinhafel, who stepped down nearly five months after Target disclosed a huge data breach in which hackers stole millions of customers' credit- and debit-card records. The theft badly damaged the chain's reputation and profits. Cornell reenergized sales by having his team rev up Target's store brands. It now has 40 private label brands in its portfolio. And even before the pandemic, Cornell spearheaded the company's mission to transform its stores into delivery hubs to cut down on costs and speed up deliveries. Target's 2017 acquisition of Shipt helped bolster the discounter's same-day, store-based fulfillment services. Cornell also focused on making its stores better tailored to the local community The coronavirus pandemic delivered outsized sales for Target as well as its peers as people stayed home and bought pajamas, furnishings and kitchen items. And it continued to see a surge in sales as shoppers emerged from their homes and went to stores. But the spending sprees eventually subsided. Advertisement As inflation started to spike, Target reported a 52% drop in profits during its 2022 first quarter compared with a year earlier. Purchases of big TVs and appliances that Americans loaded up on during the pandemic faded, leaving the retailer with excess inventory that had to be sold off. In July 2023, as shoppers feeling pinched by inflation curtailed their spending, Target said its comparable sales declined for the first time in six years. Moreover, Target started losing its edge as an authority on style by focusing too much on home furnishings basics, and not enough trendy items, Fiddelke said. A customer backlash over the annual line of LGBTQ+ Pride merchandise Target stores carried that year further cut into sales. Although Walmart retreated from its diversity initiatives first, Target has been the focus of more concerted consumer boycotts. Organizers have said they viewed Target's action as a greater betrayal because the company previously had held itself out as a champion of inclusion.
Business Insider
an hour ago
- Business Insider
Target CEO Brian Cornell is stepping down. His replacement is a company insider who joined as an intern.
Target has announced it will replace longtime CEO Brian Cornell with a company insider who joined as an intern 23 years ago. The discount department store chain said Michael Fiddelke, chief operating officer and former chief finance officer, will take over on February 1 next year. He has been with the company since first joining as an intern in 2003. He has worked across merchandising, finance, operations, and human resources, the company said. Cornell has been in charge since 2014. He will become executive chair of the board of directors. The appointment comes as the retailer has suffered since the pandemic as more customers have shifted to budget alternatives. Target had a tough first quarter with falling sales and a decrease in store traffic after it decided to roll back its DEI initiatives at the start of the year. Fiddelke said in a statement he wanted to "refocus our strategy and build on the assets and capabilities that have made Target a beloved destination for incredible products and a one-of-a-kind shopping experience." "And to be clear, we have work to do to reach our full potential," he added. Target announced Cornell's departure as it reported its second-quarter earnings results, which showed sales were $25.2 billion, almost 1% down year-on-year, but above Wall Street expectations of $24.93 billion. The company's stocks were down over 8% in premarket trading as of 7.16 a.m. Wednesday. The Minneapolis-headquartered company maintained its expectation of a low-single-digit decline in sales for 2025.
