Updated 4:16 p.m. ET Aug. 20
As Target‘s next chief executive officer, Michael Fiddelke gets handed one tough assignment: reversing the retailer’s prolonged slumping sales and profits and restoring the cache of a business once admired as “Tar-zhee.”
Fiddelke, currently chief operating officer, will also be up against continuing sourcing and pricing pressures stemming from U.S. President Donald Trump’s tariff policies, as well as stiffening competition from the likes of Walmart, Amazon and Costco.
Among the possibilities for improvements, Target needs to modernize many of its stores with more compelling presentations, particularly at certain smaller urban locations. Several hundred of Target’s 2,000 stores do not have the latest upgrades. Target also needs to step up its food presentation, which seems lackluster; do a better job keeping key items in stock; invest more in technology including AI which it intends to do, and recapture a sense of product discovery and style.
Fiddelke steps up as CEO on Feb. 1, succeeding Brian Cornell who has served as CEO since 2014. Cornell will transition to executive chair of the board of directors in February. An announcement about the company’s next COO will be made at a later date.
Also on Wednesday, the Minneapolis-based Target reported results for the second quarter ended Aug. 2, which were not as bad as expected but showed continued top- and bottom-line declines. Wall Street reacted negatively to the executive and financial announcements, dragging the stock price down6.3 percent to $98.69.
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Net earnings for the quarter ended Aug. 2 were $935 million, down 21.5 percent from $1.19 billion in the year-ago quarter. Operating income in the last quarter declined to $1.3 billion, a 19.4 percent drop from $1.64 billion in the year-ago quarter.
Net sales of $25.2 billion in the second quarter compared to last year’s $25.45 billion in sales, reflecting a merchandise sales decrease of 1.2 percent, partially offset by a 14.2 percent increase in non-merchandise sales.
Comparable sales decreased 1.9 percent in the second quarter, reflecting a comparable store sales decline of 3.2 percent, partially offset by comparable digital sales growth of 4.3 percent. Bestselling categories included trading cards, bright-colored headphones and phone cases, toys priced under $20, Nintendo Switch 2, back-to-college mix-and-match dorm sets, women’s denim, skin care, hair care and bath products.
Cornell had a strong run for most of his tenure during which Target’s revenues grew from approximately $60 billion to in excess of $100 billion, the private brand portfolio grew to $30 billion in sales, digital sales grew to $20 billion and became profitable, and stores were adapted with fulfillment capabilities. Shortly after he became Target’s CEO in 2014, food was introduced to the assortment. Cornell led the acquisition of Shipt, enabling same-day deliveries, and he became an advocate of DEI after the police murder of George Floyd in 2020. Cornell received the Visionary Award from the National Retail Federation in 2022.
But for the past couple of years, Cornell has been unable to pull Target out of its hole. The company has been losing market share, and customers have been seeking shopping alternatives such as Walmart, particularly with its strong food presentation accounting for more than half of its total business; Amazon with its deals, agile logistics and breadth of offering, and off-pricers such as T.J. Maxx and Ross Stores, both consistent strong performers.
Target has also felt the pressure of Trump’s variable tariff policies, and has been hurt by customers boycotting its stores in the wake of the company’s decision earlier this year to back away from DEI initiatives.
According to GWI, a consumer research firm, the number of Americans who say they regularly shop at Target has decreased 19 percent since 2021, while the number who shop at Walmart has remained consistent. GWI indicated that since last year, the number of Democrats regularly shopping Target decreased 13 percent, while the number of Republicans regularly shopping Target increased 13 percent, which could be related to Target’s $1 million donation to Trump’s inauguration.
On Aug. 14, Target disclosed it was not renewing its partnership with Ulta Beauty, which expires August 2026. It launched in 2021 to much fanfare, grew to 600 Target locations, yet has struggled recently from intense competition from Sephora’s partnership with Kohl’s and Amazon’s push into prestige beauty.
Michael Fiddelke
Fiddelke, who joined Target 20 years ago as an intern, will be challenged to reverse Target’s sagging fortunes. He was considered a front runner to succeed Cornell as CEO. As COO, he has been leading Target’s stores, global supply chain, fulfillment services including same-day delivery with Shipt, enterprise services and properties. He has held roles across merchandising, finance, operations and human resources. As COO, and previously chief financial officer, he is credited with overseeing efforts to grow Target’s store fleet, supply chain, digital capabilities and the team. He is also credited with creating more than $2 billion in efficiencies, and has been an advocate for increasing the pay and benefits of employees.
Recently, Fiddelke established and began leading Target’s “Enterprise Acceleration Office,” which is geared to remove operational complexities, expand technology and create a more agile, faster-moving team to improve the company’s performance. The new office has been assessing where Target is and where it needs to go. Prior to Target, Fiddelke spent three years at Deloitte Consulting. He has an MBA from Northwestern University’s Kellogg School of Management.
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“I’ve established three key priorities to help us reinforce what will continue to set us apart for years to come,” Fiddelke said in a conference call with investors and industry analysts Wednesday. “I strongly believe in our differentiated place in retail. At our core, we are a style- and design-led company. We’re merchants at heart who love product and win through offering a unique assortment. So first, we must reestablish our merchandising authority in a way that is distinctly Target.
“Second, we’re a retailer that believes an elevated experience is every bit as important as product. We want guests to find a sense of joy from every trip to Target and we must do that more consistently and frequently.
“And third, we must more fully use technology to improve our speed, guest experience and efficiency throughout the business.
“We need to go beyond the occasional design partnership or new product launch and ensure we’re bringing this authority across each category in our business throughout the year,” Fiddelke added. “That will require change, and that change is happening. As an example, we’re already well underway in building Fun 101, our name for the transformation within our hardlines categories where we are reshaping the assortment in an unmistakably Target way. We’re already seeing positive comps and traffic growth in these categories, all from leaning into style and culture in much the same way we’re known for in our apparel assortment.
“Looking ahead, we need to push much harder in bringing this approach to our home category,” Fiddelke said. “And to be clear, even a category like food and beverage plays here. And we have a fantastic opportunity to further build on the newness and differentiation our loved owned brands and national brand partners provide in food.”
Commenting on Target’s second-quarter performance, Cornell said the numbers “showed encouraging signs of recovery, including improved traffic and sales trends — particularly in our stores — and disciplined cost management in a challenging retail environment.”
Target stuck to its previous 2025 forecast for a low-single-digit decline in sales, and earnings per share of $8 to $10. Adjusted earnings per share, which excludes the gains from litigation settlements in the first quarter, is expected to be about $7 to $9.
Cornell said, “There is no one better suited to move Target forward than Michael Fiddelke. He brings a remarkable level of resolve in the face of complex challenges, a deep passion for growth and a natural ability to inspire those around him to define what’s next… It has been a privilege to lead this team over the last 11 years, and I will continue to support and champion Target in my role on the board.”
“Over the last several years, the board has been executing a deliberate and thoughtful CEO succession process, including an extensive external search and assessment of many strong candidates,” Christine Leahy, lead independent director of Target’s board of directors, said in a statement. “It is clear that Michael is the right leader to return Target to growth, refocus and accelerate the company’s strategy, and reestablish Target’s position as a leader in the highly dynamic and fast-moving retail environment. Michael’s tenure gives him unmatched enterprise insight and a base of strong team trust. But what sets him apart is how he combines those strengths with a ‘fresh eyes’ mindset, challenging the status quo to evolve how the business operates, differentiates and delivers long-term value.”
Leahy continued, “On behalf of the board of directors, I want to express gratitude for Brian’s vision, leadership and dedication to Target. Under Brian, Target has become a $100-plus-billion company, with revenues increasing by $34 billion in 11 years. Target has been transformed into a true omnichannel retailer as Brian and the team pioneered the stores-as-hubs concept, developed industry-leading same-day services like Drive Up, grew digital performance and built private labels into desirable brands of their own. Together, those capabilities are a competitive strength that Michael and his talented executive leadership team will use to advance the company.”
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