Target’s executive shakeup signals newfound urgency on fixing problems

Target shook up its leadership ranks on Wednesday, signaling greater urgency around the company’s need to set a new course.

Investors have long sought evidence the company is taking seriously their concerns about its strategy and direction.

The announcement landed as Minneapolis-based Target shared a big miss on profits and another decline in sales for February, March and April.

Target is creating an Enterprise Acceleration Office, and putting its chief operating officer, Michael Fiddelke, in charge. At the same time, Christina Hennington, the chief growth and strategy officer, is departing the company.

“This is a tacit admission that Target isn’t doing a good enough job in some areas, so we welcome it as a potential way to engineer change,” said Neil Saunders, managing director of GlobalData. “But we caution that it can only accomplish its goals if the closed and defensive culture at Target changes for the better.”

Fiddelke told reporters his job is to find efficiencies and ways to grow the company more quickly.

“We need to move down that path faster, so the work I’ll be focused on is streamlining how we operate, fast-tracking critical work, and accelerating some key bets we’re excited about within technology,” Fiddelke told reporters.

The company faces the same stressed consumer environment as its competitors though with some additional pressures, such as recent boycott efforts.

In a media call Tuesday, Brian Cornell said the company in some ways is operating “week by week, almost day by day” to deal with the uncertain economy and President Donald Trump’s changing tariff plans.

But Walmart, for example, continues to grow, with sales increasing more than 4% in the latest quarter, exposing a need for Target to more aggressively address its internal operations geared toward sales growth.

Target entered this fiscal year after a year of slow growth and amid uncertainty about the effect that a new presidential administration’s trade policies would have on its pricing. In that same moment, the company was confronted with backlash by the decision to conclude its external diversity, equity and inclusion reporting.

When asked if sales were impacted by boycotts after Target pulled back on diversity goals, CEO Brian Cornell told media that results were dragged by many factors but did not deny it.

“While we believe each of these factors played a role in our first quarter performance, we can’t reliably estimate the impact of each one separately,” Cornell said.

The pullback sparked several weeks of boycotts and reduced foot traffic. It was then worsened by disclosure of the retailer’s $1 million donation to Trump’s inauguration fund.

Analysts and economists have increasingly pointed to Target’s strategies and operational inefficiencies, as well as the general economy, for its lagging results.

Shoppers have also complained about empty shelves, long wait times at checkout and poor customer service. Executives acknowledged the need to execute with “consistency” and “reliability” to improve the shopping experience.

“Store experience can be jarring within a single Target location. When you walk from the Instagram-worthy Ulta shop-in-shop into a chaotic apparel section with merchandise strewn across the floor, that contrast doesn’t just disappoint – it breaks trust," said retail consultant Carol Spieckerman.

On top of Target’s lackluster strategy, consumers are consistently price sensitive in an uncertain economic environment, analysts say.

In a note shared before Target’s results Wednesday, Bernstein analyst Zhihan Ma said: “Long-term, Target faces a difficult trade-off between stimulating top line growth and maintaining margins. Our analysis shows that it is unlikely to achieve both and, increasingly, neither.”

Cornell said the company is “not satisfied with these results and are moving with urgency to navigate through this period of volatility."

During the media call, several executives repeated Cornell’s dissatisfaction, signaling a clear need to stimulate growth.

Analysts say Target has the youngest average customer among big box retailers. Yet younger generations — namely millennials and Gen Z — often expect brands to take a stance and demonstrate their commitment, said Emmanuel Probst, global lead of brand growth and thought-leadership for Ipsos, a multinational market research and consulting firm.

“When a brand is built on purpose, that works because they stay true to themselves,” Probst said.

The decision to take prominent stances on DEI and other social issues — only to now slowly backpedal — is backfiring on Target.

In the short-term, decisions like these almost always show in the company’s financial results the next quarter, Probst said. That initial loss of customers, however, becomes harder to recover if customers found better alternatives.

Target said its comparable sales in February, March and April fell nearly 4%, far more than the 1.9% consensus estimate of analysts. Executives also predicted full-year sales would be down single digits.

Target’s net profit grew 10% to $1 billion, or $2.27 a share, and was bolstered by one-time gains from a legal settlement. Not counting the gain, the company earned $1.30 a share, below the $1.65 analysts expected.

The retailer lowered its full-year guidance to a range between $7 and $9, down from $8.80 to $9.80. Cornell said Target has taken a “conservative” approach in its guidance as tariffs and low consumer sentiment stir economic uncertainty.

With the departure of Hennington, Target said Chief Commercial Officer Rick Gomez and Chief Financial Officer Jim Lee will take on her duties. Amy Tu, chief legal officer, also is departing.

Target’s stock was down 4% in noon-hour trading. Its stock last traded at this level in March 2020. Target reached an all-time high of nearly $270 a share in mid-November 2021.

This is a developing story. Check back for updates.