Target's new chief executive officer says he has a plan to reverse the Minneapolis-based retailer's prolonged sales slump. Michael Fiddelke, who was named the company's new chief last month, outlined his strategy on a conference call today.
The retailer reported a 1.5 percent drop in sales during its October-to-December quarter, extending a streak of 11 straight quarters of negative or weak sales, but executives forecast that performance would meaningfully improve in every quarter over the coming year and gain 2 percent overall. Fiddelke, who took over as Target CEO in February, said he would draw back shoppers by redesigning stores, offering better products, and accelerating same-day delivery — while investing billions in stores and the customer experience.
According to the Daily Mail, the issue has sparked debate among observers about whether Target can reclaim its competitive footing in a retail landscape increasingly dominated by Walmart and Costco. Some question whether the company's missteps — from political controversies to operational stumbles — have permanently eroded its customer base, or whether a focused turnaround can restore growth.
The numbers paint a stark picture. Target's stock price has fallen more than 50 percent over the past five years, a period during which Walmart's total value has surged above $1 trillion, and Costco's stock price has tripled.
Sales at established locations and online fell 2.5 percent in the quarter. That means customers have been actively choosing to spend their money elsewhere — at rivals like Walmart and Amazon — rather than walking through Target's doors.
For a company that once positioned itself as a design-forward, affordable alternative, this erosion is significant. Eleven consecutive quarters of underwhelming results suggest this is not a seasonal blip but a structural challenge that demands more than cosmetic fixes.
"Sales trends have improved in recent months," said Fiddelke on the conference call today. The CEO, who started as an intern at the company's headquarters in Minneapolis, Minnesota, 23 years ago, has been given a mandate to get the retailer once again battling with Walmart and Costco.
Chief financial officer Jim Lee added encouraging context: "Sales trends accelerated meaningfully in December and January, plus we saw very healthy sales growth in February." Those are the first tangible signs that the bleeding may be slowing. Fiddelke acknowledged the pain directly. "Last year's traffic trends we are not proud of, but we are seeing early momentum in the return of traffic this year," he said. That kind of candor from the corner office is refreshing — and necessary when your stock has been cut in half.
The recovery plan comes with real dollars attached. Executives said they would open 40 new stores this year and overhaul 130 existing locations, backed by $1 billion in new stores and remodels.
An additional $1 billion will be spent on what the company calls "guest experience." Fiddelke also said Target would win back business with "wicked fast" same-day delivery and by doubling down on the company's design ethos. For investors, the question is whether these investments generate returns or simply add costs to a struggling operation.
Free-market advocates would note that capital allocation is the ultimate test of management competence. Spending $2 billion is easy; spending it wisely in a hyper-competitive retail environment is another matter entirely. Walmart and Costco did not build trillion-dollar empires by accident — they did it through relentless efficiency and customer focus.
Target's challenges extend beyond the balance sheet. The company's rollout of Pride collection products reportedly angered customers on the right, while the subsequent removal of diversity, equity, and inclusion hiring practices angered customers on the left. Last January, the retailer joined Walmart and other brands in scaling back DEI initiatives that were harshly criticized by conservative activists and the Trump administration.
Meanwhile, the broader economic environment presents additional uncertainty. The White House is implementing a global tariff of 15 percent, though the Supreme Court has struck down the highest tariffs imposed by the administration. The administration's immigration crackdown also adds complexity to labor markets and supply chains that retailers depend on. For Target, navigating these policy crosscurrents while executing a turnaround adds layers of difficulty.
For investors and consumers alike, Target's next few quarters will be telling. Fiddelke has the institutional knowledge — 23 years' worth — and a clear mandate. But in a free market, plans mean nothing without execution, and competitors like Walmart and Costco are not standing still. The retailer's forecast of 2 percent annual sales growth is modest, which is either a sign of prudent realism or an admission that the glory days remain far off.