Target Makes Aggressive Changes Ahead of Quarterly Earnings Report

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If things always look darkest before the dawn, Target employees must hope it’s about 5 a.m. The troubled retailer announces tomorrow its first-quarter financial results, and things just keep getting worse in advance of whatever Target Interim CEO John Mulligan will say on Wednesday.

Target announced today that it has replaced its Canadian head of operations after the retailer’s first major international expansion went completely awry over the last year. Its woes in Canada—Target reported nearly a $1 billion loss for its first year there—combined with the fallout from the company’s massive data breach in the fourth quarter prompted its board to sack CEO Gregg Steinhafel earlier this month.

“Target is committed to making more rapid progress in Canada,” said Mulligan after ushering out Tony Fisher and installing 15-year Target veteran Mark Schindele as the new president of Target Canada.[more]

Target called Schindele a “results-driven leader” who is expected to improve operations in Canada. Under his predecessor’s leadership, the Minneapolis-based retailer surged north of the border and opened more than 100 stores in an effort to battle Walmart there as well as homegrown Canadian retailers such as Hudson’s Bay and Canadian Tire.

But Canadian shoppers have found Target stores wrestling with inventory problems and not pricing their wares competitively. And some of the company’s exclusive brands sold in the US haven’t been available in Canada, although it has forged local collections including reviving the Beaver Canoe brand with Roots.

Some analyst questioned why—with such a clear need to change direction in Canada and the rest of the company—Target didn’t name an outsider to shake things up more quickly. After all, Mulligan, Target’s former CFO, said in a statement that “one of our key priorities is improving performance in Canada more rapidly, and we believe it is important to be aggressive.”

In fact, Target might be wise to steal a page from other distressed brands as Mulligan tries to find ways to deal with the retailer’s problems and get past them to a presumably brighter tomorrow. Walmart, for example, finally has embraced an increase in the US minimum wage, a position that not long ago would have been anathema, and General Motors just keeps recalling cars in an effort to get all of its safety matters behind the battered automaker.

How Mulligan can be more “aggressive” about solving Target’s problems overall, or whether he indeed is the right person to do so as the company has yet to name a new CEO, are questions likely to be addressed during his earnings conference call tomorrow.

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