Target faces serious challenges as CEO Cornell’s retirement nears

Brian Cornell is near the end of an 11-year tenure as Target’s CEO, and he will leave with industry-leading successes and plenty of unfinished business.

Target’s been hurt in the last three years by operational missteps, inflation’s dampening of consumer sentiment and now tariff costs. On top of all this, the company found itself in the crosshairs of America’s culture wars.

Cornell, 66, formed strategies to deal with all of it. But in September 2022, Target extended Cornell’s contract for three more years — and that time comes due in a few months.

That means the outcome of his efforts to reignite growth will depend on the man expected to succeed him, Michael Fiddelke, Target’s chief operating officer.

Target hasn’t officially named Fiddelke, 49, who spent his career at the company, including five years as chief financial officer. In a leadership shakeup last month, Target gave him additional responsibilities for hastening improvements across the company.

“It builds off Michael’s over 20 years of experience in different roles at Target,” Cornell said during a joint interview with Fiddelke at the company’s downtown Minneapolis headquarters this week.

While declining to talk about the apparent succession-in-the-making, Cornell readily praised Fiddelke over the 40-minute conversation.

“We put a lot of time in talent development,” Cornell said. “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.”

Whenever Cornell’s successor is announced, it will be a big moment for the company’s 31,000 workers in the Twin Cities and for Minnesota’s business scene, which is anchored by high-profile companies like Target.

Cornell arrived in 2014 at a moment of crisis, when it was losing money from an ill-fated expansion in Canada.

As Target’s first outsider CEO, he presided over immense changes. He responded to e-commerce rivals with a strategy of using stores as distribution hubs, a move that positioned Target for stunning growth during the pandemic.

Target’s revenue rose 50% under his leadership. Its e-commerce business grew 20 times larger.

“It’s been a tremendous team effort that has completely changed the company and will position it as a long-term winner in retail,” Cornell said.

However, Target’s performance has been choppy in recent years.

The company’s sales fell nearly 3% in the February-to-April quarter, reversing a streak of three quarters of sales increases. Target’s stock price, which tripled during the pandemic, is back to where it was in 2019.

“We’re not satisfied with our current performance. We’ve got work to do,” Fiddelke said.

Investors are eager for more information about Fiddelke’s project, called the Enterprise Acceleration Office. But Wall Street has remained unconvinced it will produce big results, with several analysts suggesting the effort came too late.

“This year, the market’s written off Target in terms of [sales growth], so the expectation is hopefully next year you start to see stronger trends,” said Rupesh Parikh, an analyst for Oppenheimer.

Target’s challenges trace back to spring 2022, when two years of unprecedented growth abruptly ended.

During the peak pandemic years of 2020 and 2021, consumers spent heavily on discretionary goods — like those that dominate Target’s offerings.

But in 2022 they shifted their spending abruptly to services and experiences, like traveling and dining. Target didn’t expect the shift to be so swift and so was stuck with excess inventory that had to be sold at a discount.

“We’re paid to understand consumer trends,” Cornell said. “We didn’t anticipate how quickly people were going to say ‘All right, [after] this pandemic, I’m changing my lifestyle. I’ve got to get back out and travel.’”

Inflation entrenched itself into the American consumer psyche. Even upper middle-class households focused their dollars on essentials, bypassing home goods and apparel. Consumers scoured for even better bargains, shifting to competitors such as Walmart.

Target responded by marketing their cheaper items, lowering prices on thousands of household basics and introducing lower-priced store brands.

In spring 2023, not long after adjusting to the inventory glut, Target came under harsh criticism from right-wing activists over the placement and scope of its Pride month merchandise. After some stores were vandalized, Target moved the merchandise to a less prominent place in most stores, leading to public outcry from some on the political left.

Target stumbled back into the nation’s culture war when, just a few days after President Donald Trump’s second inauguration, it announced what appeared to be a backtracking on its commitment to a diverse workforce and support of organizations that serve people of color.

That led a group led by Black women leaders in the Twin Cities and others to start boycotting Target. The organizers of Twin Cities Pride rejected the company’s sponsorship. Later, it was revealed the company donated $1 million to Trump’s inauguration. Executives acknowledged the company’s latest quarterly sales were hurt by the boycott.

“We certainly didn’t expect that kind of reaction,” Cornell said.

Target met all the five-year goals established after the murder of George Floyd that were to assist Black entrepreneurs and suppliers.

“By trying to please everyone, [Target] ended up alienating a lot of people,” said Joe Feldman, an analyst for Telsey Advisory Group. “Rather than quietly adjusting things, they made announcements. That’s not the same as abandoning DEI completely, but the public perception can be damaging.”

Cornell said in a follow-up email that he felt some critics misrepresented the changes.

“While it can be disappointing when our actions and values are misrepresented, we’re focused on what matters most, creating an experience that’s inclusive for all,” Cornell said.

The company continues to give 5% of its pretax profits to charities and remains one of the largest benefactors in the Twin Cities. For instance, a Hmong national business convention in Minneapolis this spring listed Target as its top sponsor. The company was also recently announced as a platinum partner of the 2026 Special Olympics, which will be held in Minnesota.

Target in 2018 achieved 100% pay equity on gender and racial lines and has maintained it every year since, according to its diversity and governance reports. Cornell leads a C-suite of five men and nine women; five are people of color. Its 12-person board of directors has eight men and four women; four are people of color.

“I don’t know a place with a more diverse board, senior management, overall management and supplier base,” said Doug Baker, the retired longtime CEO of St. Paul-based Ecolab who is also the longest-serving member of Target’s board.

One reason Target so often turns up in the national conversation is that, more than most retailers, it for years has attracted shoppers by appealing to their emotions. Walmart and Costco emphasize low prices, while Target markets itself as a fun and efficient place to shop.

“One of the difficulties with building and maintaining a brand like Target is it does ebb and flow,” said analyst Neil Saunders, managing director of GlobalData Retail. “Sometimes it’s on top, sometimes it falls back. … And Target is going through a down patch at the moment.”

The acceleration office will prioritize projects and spending, Fiddelke said. He described speeding up changes to the firm’s technology systems. He said success will be measured by how quickly Target returns to growth.

“There’s only one path that’s sustainable long-term, and it’s one of growth,” he said.

The tariff policies of the Trump administration complicate that goal because about 50% of the retailer’s merchandise is imported. If tariffs remain high, executives will face difficult choices about when to pass those costs to consumers in the form of higher prices.

For the upcoming back-to-school sales period, however, they said they will hold prices at last year’s levels.

“We’re all talking about tariffs and trying to understand the implications on the consumer,” Cornell said. “But we want to try to protect pricing as much as we can.”

Cornell hasn’t changed his view of Target’s basic proposition to consumers during his time at the company. It attracts shoppers with essentials and then entices them to spend money on non-essential items.

“We want to be known for style and fashion and design, and that comes to life through apparel and home. … Those are the categories that define who we are,” Cornell said. “We think that’s actually where the most significant market share is going to be up for grabs going forward.”