Latest news with #Fiddelke
Yahoo
2 hours ago
- Business
- Yahoo
Target Appoints New CEO. Here's What Investors Hope He Will Address.
Key Takeaways Michael Fiddelke is slated to become Target's CEO in February, disappointing investors who were looking for an external candidate to refresh the retailer's approach. Fiddelke described his 20 years of experience at the company as a benefit. Investors will look to him to catch up to competitors in the e-commerce space, address tariffs, and stock merchandise that appeals to more of its core customers. Target veteran Michael Fiddelke won't become CEO for months, but the stock market is already disappointed with his appointment. Investors hoped Target (TGT) would replace CEO Brian Cornell with an external hire, with most of 50 investors polled by Mizhuho this summer stating that as their preference, analysts said. "The market was looking for fresh eyes and a change agent," JPMorgan said after Target announced the leadership change Wednesday morning. Besides facing questions about whether he will offer a novel approach, Fiddelke will be expected to address several issues. Target has a less robust digital operation than competitors, more significant tariff risks, and a customer base that thinks merchandise lacks the company's distinct "Tar-zhay" flair, the company and analysts said. Target shares fell 6% on Wednesday, making the stock one of the biggest decliners in the benchmark S&P 500 index. The stock has lost more than a quarter of its value since the start of the year. E-Commerce Turnaround Needed Fiddelke, who is slated to start as CEO in February, will need to turn around sluggish sales, especially in e-commerce. Target has reported comparable sales growth during three of the past 10 quarters, according to data from Visible Alpha. Walmart's (WMT) digital sales appear to be growing at least three times as fast as Target's, Bank of America wrote in a research note Friday. The number of consumers actively using Target's app fell 4.1% year-over-year in July, while the volume of domestic Walmart app users shot up 17.2%, the research said. 'Digital traffic growth is key to scaling digital advertising and [third-party] marketplace fees, which are increasingly needed to mitigate gross margin pressures,' Bank of America said. Tariffs Pressure Profit Margins Target's profit margins may be particularly squeezed since it imports a greater share of merchandise than Walmart, Bank of America said. Target will likely need to raise prices more than some of its peers to offset tariffs, the analysts said. That may be tricky in an environment where even high-earners are focused on finding savings. Recent inventory has disappointed customers looking for the trendy, inexpensive finds that inspired the "Tar-zhay" nickname, company executives have said. Re-establishing Target's 'merchandising authority' is a priority for Fiddelke, along with improving the in-store experience and using technology to become more efficient, he said. Fiddelke argued on a conference call Wednesday that his experience—leading merchandising, finance, human resources, and operations teams—will be beneficial. 'There's real power in drawing on 20 years of knowing what makes Target, Target,' Fiddelke said, according to a transcript made available by AlphaSense, adding that this gives him clarity on 'what our unique path is that's going to lead to growth." Target also handed in second-quarter results Wednesday that beat or met analyst expectations, while affirming its full-year outlook. Read the original article on Investopedia
CNBC
4 hours ago
- Business
- CNBC
As Target chases a comeback, its new CEO must take on skeptical investors and customers
When Target's new CEO Michael Fiddelke steps into the role in early February, he will inherit a company facing slumping sales, faltering customer loyalty and skeptical investors. Its fiscal second-quarter results posted Wednesday illustrated the big-box retailer's key challenges. Sales fell again from the year-ago period. Customer traffic declined. And shoppers spent less on average during their trips to Target's website and stores than a year ago. Those results extended a rocky several years for Target, which has tested the faith of many investors. Target's market value has fallen from a high of $129 billion in 2021 to about $45 billion on Wednesday. Fiddelke, announced Wednesday as Target CEO Brian Cornell's successor, will soon lead the retailer's comeback efforts and will have to show he can revitalize a company where he has spent about two decades. On an earnings call Wednesday, he acknowledged Target is falling short and outlined priorities including refreshing the company's merchandise and improving the shopper experience. Fiddelke described his long run with the retailer as "an asset," and said he knows what Target can be at its best. "I know we're not realizing our full potential right now, and so I'm stepping into the role with a clear and urgent commitment to build new momentum in the business and get back to profitable growth," he said. The 49-year-old rose through the Target ranks after starting as an intern. He has held positions across merchandising, finance, operations and human resources, including a recent stint as chief financial officer and his current role of chief operating officer. He also got tapped to lead the Enterprise Acceleration Office, a new effort that Target announced in May to kickstart its turnaround. Yet the Minneapolis retailer's decision to hire Fiddelke, instead of an external candidate, got a chilly reception. Investors responded to the pick with a stock selloff on Wednesday. Shares fell more than 6% on Wednesday, bringing its losses so far this calendar year to about 27%. That trails well behind the more than 8% gains of the S&P 500 during the same period. Wall Street had favored an outsider for the job, according to a June survey of 51 investors by Mizuho Securities, an equity research firm. About 96% of investors polled favored an external hire for Target's next CEO, it found. Manny Chirico, the former CEO of Calvin Klein and Tommy Hilfiger parent PVH, said investors were hungry for a bigger change. "I think the market is questioning whether the internal candidate, with Brian [Cornell] staying on as executive chair, is that a bold enough move going forward?" he said in an interview Wednesday on CNBC's "Squawk Box." One of Fiddelke's first major challenges will be convincing investors and shoppers that Target can recapture the magic that turned it into a company that other retailers emulated and poached for talent. Customers and former employees told CNBC the retailer had lost some of its best-known traits, including its clean and well-stocked stores, friendly staff and attention-grabbing merchandise. Some customers also decided to shop elsewhere in response as they protested its Pride collection, its subsequent move to pull some items from that line and its decision to roll back key diversity, equity and inclusion efforts Target became known as "Tarzhay," a French-sounding nickname, because of its strength in offering trendy and often exclusive clothing, home decor and more at lower prices. It turned its stores into a mall-like experience by adding Starbucks and small shops from Ulta Beauty. And it drew excitement through collaborations with fashion designers. The company's ability to nudge shoppers to blow the budget — or at least buy more than the items on their shopping lists — became the subject of social media videos and memes. Shoppers joked about walking into the store for one item, yet walking out with dozens. "There was a time when Target was on top of the world," said David Bellinger, retail analyst for Mizuho Securities, on Wednesday. Target's sales rose more than $15 billion in the fiscal year following the start of the Covid pandemic. Its shares soared to an all-time closing high of $266.39 in 2021. On Wednesday afternoon, its stock was trading more than 60% below that level, closing the day at $98.69. Bellinger said Target got a boost not only from its cheap chic reputation, but also from stimulus dollars during the Covid pandemic. As the crisis faded, so did Target's retail edge. Target's annual sales have been roughly flat for the past four years. Target said it expects total sales to fall by a low-single-digit percentage this fiscal year. Other factors hurt Target after the pandemic. Customers shelled out on dining, concerts and vacations. Shoppers became more selective about spending as they faced decades-high inflation. And the retail supply chain faced new tests, including conflict in the Middle East and most recently, President Donald Trump's higher tariffs on imports from dozens of countries. Target also lost ground with competitors. Chief Commercial Officer Rick Gomez said on Target's earnings call in May that the retailer held or gained market share in 15 of its 35 merchandise divisions in the first quarter. Put another way, it lost ground in the majority of categories that it sells. While Target faced problems out of its power, many of its issues were self-inflicted, Stacey Widlitz, president of SW Retail Advisors, told CNBC's "Squawk Box" on Wednesday. "It's used to be clean and exciting and fresh brands," she said. "That has just all changed in the past two years, and we've heard them talk about how they're going to fix it, and we haven't seen it." Bellinger said he has seen the changes on trips to his nearby Target store. Curbside pickup is quick and convenient. But inside of the store, he said a lot of merchandise is locked up to prevent theft, customers wait in long lines to check out and the cashier area is short-staffed. "It's just not an easy shopping experience," he said. In one of the new challenges Fiddelke will have to face, Target and Ulta next August will end their partnership, which had helped to drive beauty sales for Target. Fiddelke kicked off his charm offensive on Wednesday on Target's earnings call. Though he is not yet in the role, he said Target isn't waiting until his starting date in February to make changes. He pledged to move with urgency to get the company back to sales growth. And he laid out his top three priorities, saying he would focus on winning back Target's reputation as a strong merchant, enhancing the customer experience at stores and using technology to improve its business. Even before the CEO announcement, Target touted its plan to get back to its Tarzhay image. Its leaders have pointed to signs that strategy is working. Target's limited-time collection with Kate Spade, which launched in mid-April and included colorful dresses, accessories and more, was its strongest designer partnership in a decade. Gomez described its new line of Champion activewear and sporting goods, which debuted this month, as "really the epitome of Tarzhay." And on Wednesday, Target said it had fresh evidence. The company's sales improved from the first quarter to the the second quarter, Fiddelke said, even though they were negative year over year. Sales trends in all six of Target's key merchandise categories improved from the previous quarter, he said. And the retailer got better at fighting out-of-stocks, with the best on-shelf availability of items that it has had in years, he said. The work will continue, Fiddelke said. For example, he said it's overhauling its hardlines category, which includes items like TVs, laptops, toys and trading cards. Target also wants to turn around weaker sales in its home goods category. Its new Disney and Marvel-themed bedding and decor in its kids' home line, Pillowfort, and new colors, patterns and fabrics in Casaluna, its premium bedding line, have been popular, Fiddelke said. "Now, what the team needs to do is say 'Okay, we need to do more of that, more consistently, more frequently, across bigger parts of the business,'" he said. It plans to make changes next year to Threshold, its largest home goods brand, he said. Beyond fixing its brands and launching new merchandise, Fiddelke's ability to turn around the company may hinge on one critical task: restoring the identity of a retailer that loyal customers knew and loved. "If Target went away tomorrow, you'd have a lot of disappointed consumers, millions of consumers," Bellinger said. "There is a true core customer who loves Target, and there's a ton of upside here, if they can figure it out."
Chicago Tribune
5 hours ago
- Business
- Chicago Tribune
Target CEO to step down amid company struggles
NEW YORK — Target named an insider as its next chief executive officer Wednesday, a decision that comes as the discount retailer tries to reverse a persistent sales malaise and to revive its reputation as the place to go for affordable but stylish products. Minneapolis-based Target said CEO Brian Cornell, who has led the company for 11 years, would step down on Feb. 1. The board of directors chose Chief Operating Officer Michael Fiddelke, a 20-year Target veteran, to succeed him. Target, which has about 1,980 U.S. stores, has struggled to find its footing since inflation caused pinched shoppers to curtail their discretionary spending. Customers have complained of messy stores with merchandise that did not reflect the expensive-looking but budget-priced niche that long ago earned the retailer the jokingly posh nickname 'Tarzhay.' Consumer boycotts since late January, when Target joined rival Walmart and a number of other prominent American brands in scaling back corporate diversity, equity and inclusion initiatives, have compounded its predicament. Some retail analysts were surprised the board did not pick a candidate from outside the company to turn things around. Target's stock price was down more than 8% in early morning trading after the company announced both Fiddelke's appointment and another quarter of disappointing sales. 'The Street was looking for a fresh pair of eyes that might bring a solution to two years of stumbles,' Stacey Widlitz, president of investment research firm SW Retail Advisors, said while noting that she thinks investors should give Fiddelke a chance. During a call with reporters on Tuesday, Fiddelke acknowledged many of Target's problems. For example, he said he thought the company became too focused on basic home goods during the coronavirus pandemic, when demand for cozy furnishings and kitchen tools exploded. Fiddelke said he would step in as CEO with three urgent priorities: reclaiming the company's position as a leader in selecting and displaying merchandise; improving the customer experience by making sure shelves are consistently stocked and stores are clean; and investing in technology. '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,' Fiddelke said. Target has reported flat or declining comparable sales — those from established physical stores and online channels — in nine out of the past 11 quarters. On Wednesday, the company said comparable sales dipped 1.9% dip in its latest three-month period, when its net income also dropped 21%. 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 into stores. '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 in August 2014, Cornell spent more than 30 years in leadership positions at retail and consumer-product companies, including as CEO at Michaels, Walmart's Sam's Club and PepsiCo America Foods. He replaced former CEO Gregg Steinhafel, who stepped down 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. In September 2022, the board of director's extended Cornell's contract for three more years and eliminated a policy requiring its chief executives to retire at age 65. Fiddelke will become the board's chair when he takes over, and Cornell will transition into the role of executive chair. Cornell reenergized sales by having his team rev up Target's store brands. He focused on better tailoring stores to their local communities. Cornell also spearheaded the company's mission to transform its stores into hubs for shipping or picking up online orders. The move helped to reduce costs and speed up deliveries, but the in-person experience for shoppers suffered as Target diverted store workers to fulfilling orders placed online, according to some analysts. The coronavirus pandemic delivered outsized sales for Target as well as its peers as many people bought items to help them work and entertain themselves at home. Sales continued to surge when shoppers first returned 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. Its sales continued to languish as customers defected to Walmart and off-price department store chains like TJ Maxx in search of lower prices. 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. In 2023, a customer backlash over the annual line of LGBTQ+ Pride merchandise Target carried also cut into sales. Many analysts think Target stumbled by losing sight of the winning mix of merchandising savvy and competitive price points that had distinguished it from Walmart, the nation's largest retailer. Walmart gained market share among households with incomes over $100,000 as U.S. inflation caused consumer prices to rise rapidly. 'While we think Fiddelke is talented and has a somewhat different take on things compared to current CEO Brian Cornell, this is an internal appointment that does not necessarily remedy the problems of entrenched groupthink and the inward-looking mindset that have plagued Target for years,' Neil Saunders, a managing director at GlobalData Retail, said Wednesday.
CNBC
5 hours ago
- Business
- CNBC
Target's next CEO started as an intern—and rose up the ranks over 22 years
Twenty-two years ago, Michael Fiddelke was a finance intern at Target. Now, he's set to become the company's next CEO. Fiddelke, currently Target's chief operating officer, will take over the top position and join the board of directors on February 1, 2026, the company announced on Wednesday. He'll replace Brian Cornell, who's run the retailer for the last 11 years — overseeing it through record stock highs in 2021 and an ongoing market slump essentially ever since. When Fiddelke interned at Target in 2003, he was a graduate student at Northwestern University studying business administration and finance. Target hired him as a full-time analyst the following year, and he got promoted or changed jobs within the Minneapolis-based company roughly every two years, all the way up to his CEO appointment. His resume at Target between 2007 and 2024 includes several director titles, vice president, senior vice president, executive vice president and chief financial officer. "I can tell you that the intern that walked through those doors down the road 22 years ago wouldn't have predicted a Target path that leads to today," Fiddelke, 49, said in a video on LinkedIn on Wednesday. Fiddelke's job as CEO may not be easy. For the past four years, Target's sales have been generally flat, a trend that the company's leaders have described as a blip — but customers, former employees, vendors and analysts say is largely a result of subpar experiences in leanly staffed stores and a Trump-era turn away from diversity efforts, CNBC reported on July 15. "They have kind of lost their identity," said one former employee, who worked at Target for nearly 10 years. Target's fiscal second-quarter results exceeded Wall Street's earnings expectations, but its full-year outlook still predicts a single percentage point decline in sales. "Getting Target back to growth is my top priority," Fiddelke wrote in his LinkedIn post. "We'll need to operate differently, move with urgency and focus, and make bold choices to get there. We have the foundation to build new momentum, and I'm eager to accelerate work already underway and find new ways to deliver the incredible products and experiences our guests expect from us." When Fiddelke takes over, he'll join the likes of Nike's Elliott Hill, Microsoft's Satya Nadella and General Motors' Mary Barra as people who went on to lead the companies they joined as interns. His decades of experience at Target during both high and low periods help him "understand this business" and what makes it "distinctly unique," he said on Wednesday during a call with reporters. "I know you're not satisfied with where Target is today. Neither am I," he said in the LinkedIn video, speaking to consumers. "Getting us back to growth is my No. 1 priority and I'm eager to get to work."
Miami Herald
6 hours ago
- Business
- Miami Herald
Who is Target's next CEO, Michael Fiddelke?
Target Corp. on Wednesday named Michael Fiddelke as its new chief executive, promoting the company veteran who has served as chief operating officer since February. Fiddelke, 49, will succeed Brian Cornell, who led the Minneapolis-based retailer for 11 years through a period of significant growth and recent challenges. The promotion will take place in February, after the all-important holiday season, when Cornell will transition to executive board chair. Yes, the succession has been widely anticipated after Target reorganized its leadership structure in May, giving Fiddelke additional responsibilities overseeing the company's newly formed Enterprise Acceleration Office aimed at improving operational efficiency. The company also announced in May that Christina Hennington, former chief growth officer and potential CEO contender, would depart. "It is clear that Michael is the right leader to return Target to growth, refocus and accelerate the company's strategy, and reestablish Target's position as a leader in the highly dynamic and fast-moving retail environment," said Christine Leahy, lead independent director of Target's board, in a news release. Fiddelke started in 2003 as a finance intern and then moved up through the ranks, serving in positions in finance, merchandising, human resources and operations. Before being promoted to chief operating officer, he was chief financial officer from 2019 to 2024. He also had served as senior vice president of operations. He sits on the board of Target subsidiary Shipt, a same-delivery service acquired by the retailer in 2017. "We put a lot of time in talent development," Cornell told the Star Tribune in June. "Michael's a great example. He's been in HR. He's been in store operations. He's had roles in merchandising. He was our CFO. So it gives him a great background to understand the total company." Fiddelke said in a Target post when he was promoted to chief operating officer that he grew up on a farm in Manchester, Iowa, about 50 minutes west of Dubuque, Iowa. "It was a small farm, but my dad made sure I had chores to do every morning before I headed to school. That's where the work ethic set in," he said. He received a bachelor's degree in industrial engineering from University of Iowa in 1999, and an MBA from Northwestern University's Kellogg School of Management in 2004. He worked for three years at Deloitte Consulting early in his career. The average age for a Fortune 500 CEO in 2024 was 57, according to Madison Trust Co. Meta's Mark Zuckerberg is 41. Cornell was 55 when hired as the chief executive of Target. Bob Ulrich, Target's longest serving CEO who's credited with developing the retailer's brand and seeing it through massive expansion, took over at 43. He lives in the Twin Cities-area with his family and has served on the board of Minnesota Children's Museum. On a media call Tuesday, Fiddelke said his top priorities as CEO are to return Target to its previous status as a leader in style and design, improve consistency of in-store and online experience and increase technology use across the business. "We are urgently acting to make changes to reclaim that authority in some categories where we haven't had it. A category like home, we haven't been happy with our performance over the last few years," Fiddelke said. "We saw explosive growth during the pandemic. And on the heels of that growth, we focused a bit too much on the core assortments and lost some of our fashion and design leadership." Fiddelke inherits a company facing multiple headwinds. The leadership transition comes as Target works to regain momentum after several quarters of inconsistent performance. The company has emphasized its focus on value offerings and improving its supply chain efficiency to better compete with rivals including Walmart and Amazon. "Regaining the market's credibility will be critical, but it's achievable. History offers numerous examples of turnarounds under a new leader," wrote Michael Lasser, UBS analyst, in a research note. "In our view, Target has the foundation and scale to stage a recovery, making the stock a longer-term opportunity." Target's comparable sales declined the last two quarters as consumers pulled back on discretionary spending amid persistent inflation. The retailer also dealt with boycotts related to its Pride merchandise last year and its decision to pull back on certain diversity initiatives in January. Investors have pressed Target to demonstrate greater urgency in addressing operational inefficiencies and adapting to changing consumer behaviors. "Michael's tenure gives him unmatched enterprise insight and a base of strong team trust. But what sets him apart is how he combines those strengths with a 'fresh eyes' mindset, challenging the status quo to evolve how the business operates, differentiates and delivers long-term value," Leahy said. According to a filing with the Securities and Exchange Commission Wednesday, Fiddelke's new pay package as CEO hasn't been approved by Target's board of directors yet but is expected to be approved in the next few days and disclosed in an additional SEC filing. Fiddelke made $3 million last year as the chief financial officer and executive vice president of Target. That pay included a $900,000 salary and $1.2 million from previously issued restricted stock that vested during the year. In a 2024 post by Target alongside his COO promotion, Fiddelke said it's a combination of curiosity and listening. "I try to draw out the voice that I think a conversation needs, even if it's not there," he said. "We talk so much about the power of an inclusive culture, but that power only happens if you hear those diverse perspectives and create an environment of trust where it can help shape the decision making." (Staff writer Patrick Kennedy contributed to this reporting.) Copyright (C) 2025, Tribune Content Agency, LLC. Portions copyrighted by the respective providers.
