Target plans to pour billions of dollars into its operations this year in a bid to snap a stubborn sales slump and win back shoppers drawn to its mix of stylish clothing, housewares, beauty items, and affordable packaged foods.
The strategy is being steered by Michael Fiddelke, who became chief executive last month following more than 20 years with the retailer. He previously served as chief operating officer under Brian Cornell, who led the company for more than 11 years before stepping down.
Fiddelke, speaking in an interview with The Associated Press, outlined efforts to update stores and product assortments, rebuild customer confidence, and manage external pressures.
“Prove is the right word. It’s a ‘Prove it’ story,” Fiddelke said of convincing skeptics he can deliver change despite his insider status. “I have the benefit of a 23-year running start that has taught me so much about how retail works. I’ve gotten to see Target at its very best. I’ve gotten to see us when we are not at our very best, and that leads (to) a real clear view for me of when we’re hitting on all cylinders.”
Fiddelke said he pairs that history with honesty about past decisions, including those made during his time as COO and CFO.
To spark creativity, Fiddelke has urged merchandise buyers to travel more.
“One of the things that’s critical to being design-led is you have to have an environment that fosters creativity in the right way,” he said, AP reported.
He cited a recent Alpine Chalet display inspired by a European Christmas market. Travel had been curtailed during the pandemic but is now fully resumed.
Fiddelke has also turned to the company’s history for guidance, while cautioning against pure nostalgia.
“I think that history can be instructive on centering who we are in our core. That’s different than nostalgia for nostalgia’s sake,” he said. “And you can’t just fall in love with nostalgia. The playbook from 10 years ago is not going to win in today’s retail.”
The retailer has come under fire for dialing back diversity, equity, and inclusion efforts and for its response to immigration enforcement actions near its hometown. Boycotts have taken a toll.
Fiddelke pointed to Target’s longstanding community involvement.
“I’ve been at Target 23 years. It has certainly been true in every single one of those 23 years that Target has a deep history of being a productive partner in the communities in which our 2,000 stores operate,” he said, noting the company’s practice of giving 5% of operating profits back. “Target being a place for everyone matters.”
Boycotts were “one of the things that impacted our sales” last year, Fiddelke said. “And so we know we’ve got trust to win back with guests, and we’ll be focused on doing it. There’s no easy button to win back trust, but we’ll do the work.”
On avoiding a stronger public stance against immigration enforcement, Fiddelke said that safety guided choices.
“When I think about navigating the start of the year here, especially in our hometown in Minneapolis, the thing that we have kept front and center every single day is the safety of our team. And so the safety of the team and the safety of our guests has been our North Star for decision making, and that’s guided every decision that we’ve made.”
He described Target as “an emotional brand” that holds itself to high standards in products, experiences, and community presence.
“I think we’re an emotional brand. We’re a brand people love,” he said.
The company is investing another $2 billion this year, on top of a previously announced increase that brings capital spending to $5 billion total. An additional $1 billion in operating expenses will go toward increased store staffing and training, as well as artificial intelligence tools. Plans call for opening 30 new stores and remodeling 130 existing ones, many of which have not been updated in 10 years.
Target will introduce Target Beauty Studio in 600 stores this fall, offering upscale beauty products and staff expertise in place of its Ulta partnership, which ends in August.
Merchandise assortments are being refreshed, with 75% of the decorative home selection turning over to new items.
Private labels, including Threshold, are being reworked, and AI is helping accelerate trend spotting so products reach shelves faster.
Food offerings will see nearly 50% more new items, including expanded fresh produce and specialty brands such as Fishwife.
Fiddelke said store teams are motivated.
“If I had to characterize what I’m hearing from the team, it’s a team that’s hungry to win. There’s so much pride in Target, and there’s so much excitement to get this company back to growth.”
“This is a new chapter, and it’s all about growth,” he said, per AP. “We’ll do so by playing our own game and making big changes to delight our guests.”
For the quarter ended January 31, Target posted a profit of $1.05 billion, or $2.30 per share, compared with $1.10 billion, or $2.41 per share, a year ago. Sales slipped 1.5% to $30.45 billion. Comparable sales declined 2.5%, marking the latest in a string of soft results. Annual sales fell nearly 2% to $104.78 billion.
The company projected 2% net sales growth for the current year to $106.88 billion and earnings per share of $7.50 to $8.50. It noted positive momentum, with sales and traffic picking up late in the quarter and gains in food, beauty, and toys. Comparable-store sales rose at the start of the current quarter, and the company said it expects net sales to grow every quarter this year.
“The best thing for us to do is always focus on a clear strategy. Control what we can control,” he said, per AP.
