Target names insider Fiddelke as CEO to guide turnaround

File - A shopper wheels a cart through the parking lot after making a purchase at the Target store, Monday, Feb. 27, 2023, in Salem, N.H. (AP Photo/Charles Krupa, File)

Target promoted insider Michael Fiddelke on Wednesday as its new CEO to turn around the struggling retailer after a series of challenges over recent years that caused its shares to vastly lag those of its peers.

“My number one goal is to get us back to growth,” said Fiddelke, a 20-year company veteran most recently serving as chief operating officer. Fiddelke will succeed long-time top boss Brian Cornell.

Fiddelke’s remarks came during a media call following Target’s second-quarter earnings report, where it stuck to its annual forecasts. The company’s stock fell 10 per cent in premarket trading, pointing to the challenges Fiddelke faces.

“Given the many challenges TGT has faced over the last several years, it’s not surprising that investors were leaning towards an external hire,” said Steven Shemesh, analyst at RBC Capital Markets.

“In either case, however, TGT faces a steep uphill battle to bridge the gap with competitors in an increasingly digital world.”

Target has struggled with merchandise missteps, retail crime, and inventory management. Over the past year it has faced challenges in maintaining steady sales growth, and its pullback on diversity, equity and inclusion policies (DEI) in January angered some loyal customers who long praised the company’s commitment to inclusiveness.

Fiddelke, 49, will take the helm on February 1, 2026 as Cornell transitions to the role of executive chairman. He said his three priorities are to improve the quality of merchandise, value and style that Target offers, ensure a more consistent shopper experience and embed more technology in all parts of its business.

“We need to move faster, much faster,” he said.

The company’s struggles have manifested in a consistently weak share performance. The stock is down 23 per cent over the last five years, a period of time where Walmart has risen 125 per cent and Costco shares have more than tripled.

Comparable store sales fell 1.9 per cent, smaller than expectations for a three per cent decline.

The company also held on to its annual forecasts after lowering them in May when it blamed weak demand for the largely discretionary merchandise it sells like apparel and electronics items.

On tariffs and pricing, the company reiterated its stance from May, stating that price increases would be considered only as a last resort.

Cornell, who has led Target for 11 years, noted progress in diversifying the company’s sourcing strategy. This includes reducing reliance on store-brand products from China and leveraging Target’s scale to navigate the tariff landscape more effectively.

Deeper discounts

The retailer has taken steps to turn itself around, including intensifying efforts to entice customers worried about the economy. These have included offering 10,000 new items starting at US$1, with most priced under $20, and launching several affordable private label lines.

Still, consumers remain selective and are motivated by promotions as inflation continues to strain household budgets, Target executives noted on the call.

Target said deeper discounts helped bring more shoppers into stores and boosted how much they spent. Store traffic improved from a 2.4 per cent drop in the first quarter to a smaller 1.3 per cent decline in the second. The average amount spent per visit also improved, falling just 0.6 per cent compared to a 1.4 per cent drop in the previous quarter.

Sales improved across all six main product categories: apparel, beauty, food, home furnishings, hardlines, and household essentials. The hardlines category, which includes gaming devices such as the Nintendo Switch and other electronics, performed best, growing five per cent and posting its strongest results since 2021.

Target reported second-quarter net sales of $25.21 billion, beating estimates of $24.93 billion, according to data compiled by LSEG. Excluding items, the company reported earnings per share of $2.05, which topped Wall Street estimates by 2 cents.

Like Target, home improvement company Home Depot also retained annual targets but warned of some price increases due to tariffs.

Retail bellwether Walmart reports quarterly results on Thursday.

(Reporting by Juveria Tabassum in Bengaluru; Editing by Muralikumar Anantharaman and Saumyadeb Chakrabarty)