Target shares tanked 7% after it tapped a longtime insider as its new chief executive – sorely disappointing investors who had hoped the struggling “cheap chic” retailer would lure a retail guru from outside.
Michael Fiddelke, the 49-year-old chief operating officer of the “cheap chic” retailer, will take the helm Feb. 1 to replace CEO Brian Cornell who will step into the board’s executive chairman role, the company said Wednesday.
Cornell, 66, who led the company for a decade, said: “There is no one better suited to move Target forward than Michael Fiddelke.”
But investors had been hoping for an outside executive to take over the flailing chain, which has reported dismal results in recent quarters and lost ground to big-box rival Walmart.
As a 20-year Target veteran who previously served as chief financial officer, Fiddelke will be forced to tackle a persistent slump in sales — compounded by backlash from shoppers over a controversial Pride collection including gear for kids and its end of DEI programs.
Meanwhile, rampant shoplifting allegedly doomed Target’s partnership with Ulta to open mini beauty shops in nearly a third of stores.
Target announced last week that the deal was off.
Target shares, which have been trading at multiyear lows since the spring, were recently off 7% at $98 after falling more than 10% at the start of trading on Wednesday.
“The stock price reflects that there won’t be change when change is needed,” Gerald Storch, former vice chairman of Target and ex-CEO of Toys R Us, told The Post. “The sales are negative and they are bleeding market share.”
Target did not immediately respond to The Post’s request for comment.
Christine Leahy, top independent director of Target’s board, said the company has been leading a thorough search – including external candidates – for Cornell’s replacement.
“We don’t know how thorough it was,” Storch countered, adding that a lot of outsiders would have wanted the job.
“Target’s value positioning…should be yielding better results than the low single digit revenue decline we expect for Target this year,” David Silverman, senior director of Fitch Ratings, said Wednesday.
He nodded to “the company’s recent execution missteps,” which were “exacerbated by a volatile retail industry.”
In a press release Wednesday, Fiddelke laid out his three main priorities: increasing Target’s offerings of stylish items, creating a more consistent customer experience and using technology to boost efficiency.
At the same time, Target reported second-quarter earnings that beat Wall Street estimates – though sales and store and website traffic declined once again.
Same-store sales, which includes sales on its website and stores open at least 13 months, fell 1.9% compared to the same period last year.
Customer transactions dropped 1.3% and the average amount customers spent during those transactions slipped 0.6% from the year before.
Fiddelke said on a post-earnings call that Target’s retail sales trends improved from the previous quarter, even though they were still negative.
He said sales trends in all six of Target’s key merchandise categories improved from the quarter before.
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Fiddelke said that as leader of the Enterprise Acceleration Office, which Target created in May to speed along its turnaround, he has gotten to take a closer look at where the business is underperforming.
The retailer lost ground in home goods, for example, as it focused too much on “core” items and “lost some of our fashion and design leadership that’s so important in a category like that.”
Target has made some progress in turning around its home goods category by adding Disney and Marvel-themed bedding to Pillowfort, its private label for kids’ room decor, Fiddelke said.
“Now, we need more of those examples across the category, but they give me a ton of confidence that we’re on the right path there,” Fiddelke said.
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