Tony Fisher has been replaced by senior vice president for merchandising operations Mark Schindele as president of the company’s struggling Canadian operations.
Problems up north
To say that Target Corporation (NYSE:TGT)’s expansion into Canada hit some immediate snags is too put the company’s struggles mildly. 2013 marked the first time the retailer entered into a market outside of the United States and troubles arose immediately. Target failed to pace its store openings when it saw its doors open in over a hundred locations in just a few short months. In doing so, as many analysts predicted, the retailer was plagued with difficulties keeping merchandise on the shelves. Along with that misstep, the company was deluged with complaints that many items were too expensive and Canadian customers didn’t appreciate the fact that many items sold in the States weren’t made available to them.
All said, the company lost nearly a billion dollars ($941 million) up north with the debacle that ended up costing Fisher his job.
As if this recipe for failure wasn’t enough, news of Target Corporation (NYSE:TGT)’s massive data breach that forced its CEO to resign was made public. Tens of millions of customers had their personal and payment information exposed to hackers. The expenses of the breach itself are impossible to measure just yet. Sure, there were related costs to closing the gap in security but the loss of customer traffic and trust may continue for some time.
Year-over-year for the fourth quarter, profits were down 46% during the all important holiday shopping season when the breach was made public. While Fisher certainly made some mistakes, he inherited the problems associated with the data breach.
Time to hire from outside the company?
Target Corporation (NYSE:TGT) is well-known for hiring its CEOs from within, but many analysts are calling for a CEO from outside the company as it looks to move someone (perhaps two people) into the permanent position of chief executive. Following the resignation of Gregg Steinhafel, Target appointed John J. Mulligan as its interim CEO.
“One of our key priorities is improving performance in Canada more rapidly, and we believe it is important to be aggressive,” Mr. Mulligan said in a statement. Prior to taking the job as interim CEO, Mulligan was Target’s chief financial officer. Additionally, the company announced that Mark Schindele would head the Canada operations as a nonexecutive chairman.
In a note to investors on Tuesday morning, Faye Landes, an analyst at Cowen, said, “We think today’s news confirms that Target Canada has not progressed as the company would have liked.”She also questioned the wisdom of once again hiring from within rather than seeking help from outside the company.
Target Corporation (NYSE:TGT) will report its first-quarter earnings tomorrow. Following today’s announcement, Target is presently (12:12PM EDT) trading at $56.89, down $1.46 or 2.52%. Today’s drop also has Target trading down nearly 20% so far in 2014.