Target Appoints New CEO, Investors Hope for External Hire and Digital Turnaround

Target appoints Michael Fiddelke, a 20-year company veteran, as CEO, disappointing investors who wanted an external candidate. Fiddelke faces challenges in catching up to competitors in e-commerce, addressing tariffs, and stocking merchandise that appeals to its core customers. Target shares fell 6% on Wednesday, making the stock one of the biggest decliners in the S&P 500 index.

Target Corporation (NYSE: TGT) announced on Wednesday that Michael Fiddelke, a 20-year company veteran, will succeed Brian Cornell as CEO, effective February 1, 2026. The appointment, which was made after a "deliberate and thoughtful" succession process, has disappointed investors who had hoped for an external hire [2].

Fiddelke, currently the Chief Operating Officer, will take over from Cornell, who has led the retailer for 11 years. The appointment comes amidst a period of strategic adjustments for Target, with the company facing challenges in e-commerce, addressing tariffs, and stocking merchandise that appeals to its core customers.

Target shares fell 6% on Wednesday, making the stock one of the biggest decliners in the S&P 500 index [1]. Investors had hoped that Target would select an outsider to lead the company, with a majority of 50 investors polled by Mizhuho this summer stating that as their preference [1]. Analysts from JPMorgan noted that the market was looking for fresh eyes and a change agent [1].

Fiddelke will need to address several issues, including Target's less robust digital operation compared to competitors, significant tariff risks, and a customer base that thinks merchandise lacks the company's distinct "Tar-zhay" flair [1]. He will also need to turn around sluggish sales, especially in e-commerce. Target has reported comparable sales growth during three of the past 10 quarters, according to data from Visible Alpha [1].

Walmart’s digital sales appear to be growing at least three times as fast as Target’s, according to a research note by Bank of America [1]. The number of consumers actively using Target’s app fell 4.1% year-over-year in July, while the volume of domestic Walmart app users shot up 17.2% [1].

Target’s profit margins may be particularly squeezed since it imports a greater share of merchandise than Walmart [1]. Fiddelke will need to raise prices more than some of its peers to offset tariffs, which may be tricky in an environment where even high-earners are focused on finding savings [1].

Recent inventory has disappointed customers looking for the trendy, inexpensive finds that inspired the "Tar-zhay" nickname [1]. Re-establishing Target’s “merchandising authority” is a priority for Fiddelke, along with improving the in-store experience and using technology to become more efficient [1].

Fiddelke argued on a conference call Wednesday that his experience—leading merchandising, finance, human resources, and operations teams—will be beneficial. "There's real power in drawing on 20 years of knowing what makes Target, Target," he said, according to a transcript made available by AlphaSense [1].

Target also handed in second-quarter results Wednesday that beat or met analyst expectations, while affirming its full-year outlook [1].

References:
[1] https://www.investopedia.com/target-appoints-new-ceo-here-is-what-investors-hope-he-will-address-11794432
[2] https://www.investing.com/news/company-news/target-coo-michael-fiddelke-to-succeed-brian-cornell-as-ceo-93CH-4201753