Target Corp. removed 35-year company veteran Gregg Steinhafel as its CEO yesterday in the wake of last year's disastrous data breach that hit as many as 110 million customers.
Analysts say the abrupt move likely also was triggered by Target's bungled expansion into Canada, soft U.S. sales and poor e‑commerce results. Steinhafel had been CEO since 2008.
Target is the second-largest U.S. discounter behind Wal-Mart, with $71.3 billion in annual sales last year. Its net income dropped 46 percent in the fourth-quarter that included the crucial holiday season after its Dec. 19 breach announcement heavily cut into sales.
"The data breach is a pretty public thing, but Canada was not executed well last year ... and, also, the general U.S. merchandising in the stores hasn't been as crisp or exciting," said Joseph Feldman, a Telsey Advisory Group analyst.
Target posted a $1 billion loss in Canada last year on sales of $1.3 billion.
"On a positive note, this is something that I think investors have been looking for — a change in the top that might help reinvigorate the business," Feldman said.
Target CFO John Mulligan will be interim CEO.
Steinhafel's replacement will need to identify Target's flaws in merchandising, marketing and e-commerce, said Jefferies analyst Daniel Binder. Target's core business has been lackluster for several quarters, he said, and "The latest data … suggests that even if the U.S. business has stabilized post-credit card data breach, the bigger picture for Target isn't seeing an acceptable rate of change."
The timing of Target's announcement suggests the board perhaps had received an unfavorable first-quarter update, according to William Blair analyst Mark Miller. Those results are due to be publicly reported May 21.
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