CEO Brian Cornell set to depart from Target due to sales decline, with COO Fiddelke poised to assume leadership role
Target Announces CEO Transition as Profits Suffer Amid Economic Uncertainty
Target has announced that CEO Brian Cornell will be stepping down on February 1, with Michael Fiddelke, the current Chief Operating Officer, taking over the role.
Cornell, who joined Target in 2014, has spent more than 30 years in leadership positions at retail and consumer-product companies. During his tenure, he reenergized sales by expanding Target's store label brands to 40 private labels. However, the company has seen flat or declining comparable sales in eight out of the past 10 quarters, and a 21% drop in net income in the quarter ended Aug. 2, and a 52% drop in profits during its 2022 first quarter compared with a year earlier, as inflation started to spike.
Fiddelke, a 20-year company veteran at Target, has been overseeing a restructuring effort that has included overhauling the supply network, expanding the company's stores and digital services, and cutting costs. He aims to reclaim Target's merchandising authority, improve the shopping experience, and invest in technology.
The coronavirus pandemic delivered outsized sales for Target, but spending sprees eventually subsided. The company has also been the focus of consumer boycotts since late January due to scaling back corporate diversity, equity, and inclusion initiatives. Organizers have viewed Target's actions as a greater betrayal due to the company's previous championing of inclusion.
A customer backlash over the annual line of LGBTQ+ Pride merchandise further cut into sales. In March 2023, Target's executive team announced plans to regain the chain's reputation for selling stylish goods at budget prices by expanding store label brands and shortening the time to market.
Meanwhile, Walmart has gained market share among households with incomes over $100,000, while lower-income shoppers have driven customer growth at Target. Michael Gunther, Consumer Edge Head of Insights, stated that higher-income consumers are holding up better during times of economic uncertainty.
Target's acquisition of Shipt in 2017 helped bolster its same-day, store-based fulfillment services. Before the pandemic, Cornell spearheaded the company's mission to transform stores into delivery hubs. The company's focus on home furnishings basics may have contributed to a loss of its edge as an authority on style, according to Fiddelke.
The board extended Cornell's contract for three more years and eliminated a policy requiring its chief executives to retire at age 65 in September 2022. Cornell replaced Gregg Steinhafel, who stepped down after a huge data breach in which hackers stole millions of customers' credit- and debit-card records.
As Target moves forward under new leadership, it will be interesting to see how the company navigates the current economic climate and regains its footing in the competitive retail market.
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