Target Corporation is embarking on an equally brave leadership transition. This decision is part of an effort to address decreasing sales and increasing competition from their larger competitors, Amazon and Wal-Mart. Beginning in February, Michael Fiddelke will replace Brian Cornell as CEO. This leadership change isn’t happening in a vacuum. It’s a pivotal moment for the retailer, which is feeling the pressures of a challenging market and trying to rebound.
In fiscal year 2022, or the past year, Target suffered the worst sales performance in its history, leading Target to lower its financial forecasts several times. In May, Target announced that it had lost $1 billion in sales. This represented a drop of 5.7% compared to the three months immediately preceding that time period. The company attributed this decline to a very difficult macro environment. In addition, they cited the implementation of trade tariffs, which have created uncertainty in consumer spending. Surging costs, especially on discretionary goods like clothing and electronics, have only added to Target’s challenges in the competitive landscape.
Fiddelke has worked for Target for over 20 years and is their current chief operating officer. He spoke with grave conviction about how urgent the moment is. He reiterated that the company still has “work to do.” First he stressed they must all start to react to the growing forces of retail change “much quicker, much quicker.
In May, retailer giant Target declared it would be scrapping its diversity, equity, and inclusion (DEI) targets. This decision led to significant backlash including driving opposition and concerns among stakeholders about the company’s long-term strategic direction. This polarizing move was announced just as the company’s stock price had already plummeted 67% in 2022 to date. It didn’t move, which was the most aggravating part of a tense situation.
Cornell, who has been CEO of Target for a decade, is the first outsider to lead the company. His leadership has been defined by the sweeping changes he’s enacted at the agency. Analysts say that Fiddelke’s appointment is likely more of a disappointment to investors than a major boost. Susannah Streeter, head of money and markets at Hargreaves Lansdown, noted that “there may have been hopes that a successor from a rival in the market could have brought extra knowledge, insight, and energy, valuable assets at a time of intense competition.”
Furthermore, Michael Baker, an analyst at DA Davidson, commented on the nature of Fiddelke’s promotion, stating that it “lacks the pop that a significant external hire would provide.” This sentiment echoes worries that even dramatic changes in internal leadership can adequately change the course for Target, given the waves of challenges it now faces.