Target’s Been Falling Behind Discount Retail Rivals. Its New CEO Wants to Change That.

Key Takeaways

• Target’s new CEO Michael Fiddelke is taking steps to win back customers with promotions and discounts after a slide in sales.
• The retailer is cutting prices at a time when value-focused rivals such as Walmart have been gaining market share.

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Target’s new CEO wants to win back customers with better deals.

Target (TGT) said this week that it’s slashing prices on more than 3,000 items as part of the retailer’s efforts to revitalize sales under the leadership of Michael Fiddelke, who took the helm of the company last month.

Target said most of the cuts will be between 5% to 20% across a wide range of apparel and home items. The move could help Target appeal to value-hungry consumers, at a time when discount rivals such as Walmart (WMT) have gained market share.

Why This Matters to Investors

Target has seen sales slide as American consumers across the income spectrum have turned to Walmart and other discount retailers. Target’s move to lower prices could underscore its renewed focus on value.

When Fiddelke’s appointment was announced last year, analysts said some investors were disappointed by the pick amid concerns that a company veteran could hold Target back from making a significant change in direction.

However, Fiddelke appeared to sooth some of those concerns during last week’s earnings call, when he told investors he plans to make a number of changes to “get Target back to growth,” including improving the retailer’s product lineup and renovating stores to better draw in shoppers.

UBS analysts said Fiddelke showed a “high level of energy and confidence” to turn the business around, and applauded Target’s “refresh of its strategy.” Shares of the company have surged in the wake of the event.

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Target shares were up about 2% in recent trading, leaving the stock up some 20% since the start of the year.

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