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You can tell an earnings announcement is about to be rough when a company decides to replace its CEO at the same moment it reveals its numbers.
On the surface, though, Target’s Q2 figures weren’t terrible: The retail giant beat sales and earnings expectations, and even doubled down on its forward-looking guidance.
But foot traffic at its stores declined 3.1% over the quarter, according to Retail Brew. That contributed to lower comparable sales, also known as same-store sales, which dropped 1.9% on an annual basis—the 11th straight quarter of flat or falling sales, according to the Wall Street Journal.
The strip mall staple had even bigger news today: CEO Brian Cornell is out, and COO Michael Fiddelke will be moving into the corner office after Cornell steps down on Feb. 1.
Shares declined 6.35% today, and are down 26.99% this year.
Tarzhay just can’t get its mojo back
When Cornell was first brought in to Target 11 years ago, he was tasked with his own turnaround for the retailer. His big investment—building out 1,800 physical stores—turned out to be prescient, allowing Target to capitalize on surging consumer demand during the Covid-19 pandemic with a variety of delivery and pickup options.
But since then, consumers have been ditching the fashion-forward retailer in favor of value-focused competitors like Walmart. In January, Target announced it was rolling back its DEI initiatives, sparking outrage among shoppers. On top of that, tariffs are a huge risk to Target’s business, given it imports roughly half of its merchandise.
According to an overview of analysts covering Target’s stock, its median rating is “hold” and its average price target is $102, 3.35% higher than where shares trade today.
The bottom line: It looks like Fiddelke, who started at Target as an intern back in 2003, has his work cut out for him. On a call with reporters, he broke down his three priorities: Upholding Target’s reputation as a stylish retailer, improving shoppers’ experience, and integrating tech more into operations.
Hopefully, he focuses on improving Target’s share price, too.—LB
If you want to learn more about how today’s leadership shakeup may cause some serious boardroom drama at Target, listen to a deep dive from markets vet Ann Berry on the new Brew Markets podcast.