Dive Brief:
- Target on Thursday announced three C-suite leadership changes, effective Feb. 2. Chief Stores Officer Mark Schindele is retiring after 25 years with the company. Adrienne Costanzo, currently Target’s senior vice president of store operations, will replace him.
- Chief Information Officer Brett Craig is also leaving. Chief Digital and Product Officer Prat Vemana will become chief information and product officer. And Sarah Travis, head of social commerce and Target’s media arm Roundel, will become chief digital and revenue officer.
- Also Thursday, Target said overall sales rose 2.8% in November and December from a year ago, according to an earnings preview announcement. Comparable sales rose 2% year over year, while digital sales grew nearly 9%. The company said its Target Plus digital marketplace grew nearly 50%.
Dive Insight:
After missing third-quarter earnings expectations, Target regained some momentum during the holiday season with growth in discretionary categories and specifically in toys and apparel.
That’s in contrast to the prior quarter, when sales fell from a year ago. The company had previously forecast flat Q4 comps, but now expects fourth-quarter comps to be up 1.5% year over year. The positive earnings preview prompted two analysts to describe the retailer’s holiday season performance as “encouraging.”
The update, “is a proof point, in our view, that [Target] is able to drive relevance, value, and traffic during key times for consumers,” Jefferies analysts led by Corey Tarlowe said in a Thursday note.
CEO Brian Cornell said holiday season performance beat the company’s expectations. Black Friday and Cyber Monday each saw record-high sales, according to Target, with performance in the two-month period further driven by a nearly 3% rise in customer traffic across stores and digital channels.
As Target moves to turn the page after a difficult period, the retailer also highlighted the appointment of three people to new leadership roles.
Costanzo, the retailer’s next chief stores officer, will report to Chief Operating Officer Michael Fiddelke. Schindele, who has led Target’s stores for five years, will stay on as an adviser to support the leadership transition before officially retiring on March 29.
Vemana’s appointment to chief information and product officer, alongside Craig’s retirement from the CIO position, is intended to “further strengthen the role technology plays in Target’s strategy, including the company’s operations.” Vemana’s responsibilities include overseeing Target’s overall technology strategy, including advancing the use of AI, data and automation.
The leadership changes may signal that Target wants to chart a new course for merchandising strategies and digital growth, Chris Bottiglieri, an equity research analyst at BNP Paribas Exane, said in a Thursday note.
“With today’s news of several new executive leadership changes, we wonder whether [management] is looking to usher in new strategic plans (despite these being internal promotions) around their store footprint and efforts to [drive] further digital penetration to compete with Walmart and Amazon.”
Target has emphasized its value proposition for customers throughout last year with several initiatives. They included the introduction of Target Circle 360, a paid loyalty program building on its free tier and price cuts on nearly 10,000 items across its assortment, including grocery and household.
Although Target does appear to be losing share, especially in grocery, Wells Fargo analysts led by Edward Kelly said in a Thursday note the improvement in Target’s discretionary segment is a welcome sign.