New Target CEO Shares 3 Steps to Reconnect With Shoppers

If you read the headlines you might think Target has fallen of some sort of K-Mart or Sears-like cliff. In reality, the brand has seen sales shrink but it remains profitable.

Its second quarter numbers were either mildly disappointing or mildly encouraging depending upon how you spin them.

“The company reported second quarter GAAP and Adjusted earnings per share (EPS) of $2.05 compared with GAAP and Adjusted EPS of $2.57 in 2024.,” it shared in an earnings release.

Target spins positive earnings take:

Second quarter net sales were $25.2 billion, 0.9% lower than 2024, representing a nearly 2 percentage point improvement versus the first quarter.
Traffic and sales trends improved meaningfully compared with the first quarter, particularly in stores.
All six core merchandising categories saw comparable sales improvements compared with the first quarter.
Digital comparable sales grew 4.3%, reflecting more than 25% growth in same-day delivery powered by Target Circle 360 and continued growth in Drive Up.
Non-merchandise sales grew 14.2% with Roundel, membership and marketplace revenues all growing double digits.

Target wants to change the narrative and that's not a bad idea given that the current perception is that the chain faces massive boycotts both for being too woke and for dropping its DEI programs.

The reality is that Target has always been a cyclically trendy brand with a floor in regular sales that keeps it from falling too far.

Target needs to change the narrative.

Image source: MDoculus/Getty Images

Target's problems aren't political

Both right wing and left wing activists want to take credit for Target's struggles. The left has claimed that boycotts over the chain dropping DEI initiatives have been effective.

“There are some people claiming this week that boycotts also prompted Cornell to announce he's stepping down as CEO, and that is not the case, exactly. Target did signal his retirement plan years ago. But it all fuels this bad trend at Target, where sales have now been down or flat for almost three years,” NPR's Alina Selyukh explained in a recent interview.

Target has acknowledged the existence of the boycott as one factor it has struggled, but seeing slight sales declines hardly makes this a Bud Light situation.

The chain has also faced right wing boycotts over it being too woke for supporting Pride Month and offering gender-neutral bathrooms.

Its response to those issues was to waver and remove Pride merchandise from stores which led to a dip in sales from LGBTQ+ customers as well as some “anti-woke” shoppers angry about rainbow T-shirts and other inclusive items.

Those missteps hurt for a time.

“During the second quarter of 2023, Target’s in-store sales dropped by 5.4%, with a more substantial decline of 10.9% for online sales. This downturn is likely a direct consequence of the boycott(s) against Target,” Collage Group shared.

Those impacts, however, were short-lived. Target does not have woke problem or a right-wing bias, it has a problem connecting with customers.

That's something new CEO Michael Fiddelke fully understands.

Target's new CEO has a 3-step plan

Fiddelke enters the job eyes wide open and knowing he needs to take action quickly.

“I've established 3 key priorities to help us reinforce what will continue to set us apart for years to come. 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,” he said during the chain's second-quarter earnings call.

First, we must reestablish our merchandising authority in a way that is distinctly Target.
Second, we're a retailer that believes that 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.

The new CEO is confident that customers will respond if Target makes the right moves.

As you've seen over the last few years, even when overall results have fallen short of our aspirations, we've shown how strongly our guests respond when we offer the right blend of quality, value and style not seen anywhere else in the market. To reestablish our leadership here, we need to go beyond the occasional design partnership our new product launch and ensure we're bringing this authority across each category in our business throughout the year. That will require change, and that change is happening.

Cornell will still be looming over Fiddelke as he will become Executive Chairman of the company's Board of Directors.