Target (NYSE: TGT) has done a great deal to ruin its own business. Most of the problems were management mistakes, which hurt earnings. However, management likes to say the retail market was challenging. However, their latest mistake may be the worst. Someone who helped ruin Target has been made CEO.
Key Points
Target Has Been A Mess For Years
It’s New CEO Is Like The Old CEO
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Departing CEO Brian Cornell will become the Executive Chairman. That means he will continue to run Target, at least in part. That is not much of a punishment given the failure of his tenure. Michael Fiddelke, who has been both COO and CFO, will become the new chief executive. Given his previous jobs, he contributed almost as much to Target’s failure at Cornell. What was the board thinking? Not much.
Cornell and Fiddelke have brutally beaten investors. The stock is down 35% over the last five years. The S&P 500 is up over 90% in the same period. Shares in arch-rival Walmart (NYSE: WMT) are up 119%. Costco’s (NASDAQ: COST) shares are up 185%.
In the second quarter, Target’s revenue was down fractionally to $25.2 billion. However, EPS sank 21% to $2.05. According to Morningstar, the last time Target had an annual improvement was in 2022.
Whatever else management did to hammer revenue, among the most damaging was how Cornell positioned the Target. He used the term “differentiator.” He recently commented, “We’re not like other retailers, which is precisely what consumers have told us they value about Target.” People who shop at Walmart, Costco, and other large retailers did not seem to get his message. (It is amazing to look at Target.com and compare it to Walmart.com. No one could think that the smaller retailer is differentiated at all. Target lists “differentiate” in its 10K as a “risk factor.” No one, looking at Target’s results, should be surprised.
Another Target risk factor is “positive perceptions” by guests, team members, and vendors. Opps. A series of unforced errors there.
One more sign of whether a company is well run is the actions of its board. According to the 2025 proxy, Cornell made $20,407,603 last year. The median pay for an employee was $27,090. That is a multiple of 731 to 1. Perhaps more shocking, Cornell made $19,203,353 in 2023 and $17,664,896 in 2022. Christine A. Leahy, Chair, President & Chief Executive Officer of CDW Corporation, is the Target lead director. The responsibility for this belongs to her.
Target is a mess of a company. Its board has decided to replace one CEO who ran the company into the ground with his No.2.
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