Crippled Target Promotes Someone Who Helped Break It
The Target board of directors showed poor judgment in its choice for new chief executive. The chief operating officer was part of the team that broke the company.
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No large retailer in America has posted worse results over the past five years than Target Corp. (NYSE: TGT | TGT Price Prediction). And the board has shown another example of the poor judgment that hurt it. Michael Fiddelke, Target’s chief operating officer, was promoted to chief executive, after working for his boss Brian Cornell.
As strange as it seems, Cornell became executive board chair, after a five-year period during which the stock dropped 44%, while the S&P 500 gained 79%. During the same period, the shares of rival Walmart Inc. (NASDAQ: WMT) were up 148%.
It is amazing that the board did not bring in an outsider.
Just as Fiddelke was promoted, Oliver Chen, an analyst at the investment bank TD Cowen, told clients, “Target has a lot of needs. It starts with product.” In the most recent quarter, revenue fell 1.5% to $25.3 billion. Earnings collapsed 18.8% to $1.52 per share.
Morningstar described why Target’s problems were years in the making and are probably permanent: “We do not assign Target an economic moat rating, as we believe the company lacks a structural cost advantage, pricing power, or moat-worthy intangible assets to deliver excess ROICs over the long run.” According to Morningstar, Target’s revenue and net income peaked in 2022.
Wall Street does not think well of Target. According to Yahoo, analysts do not believe this year will be any better than last year. That means it is likely its stock price will not improve.
Cornell’s tenure was a disaster. Fiddelke was on his team.
Worst CEOs of the Year: Brian Cornell of Target
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