Monday May 5th, 2014 - 10:03AM
Today, Target’s board of directors issued a statement announcing the departure of now former chairman and CEO Gregg Steinhafel. John Mulligan, Target’s CFO, has assumed the position of interim president and CEO. The company also announced that it has appointed Roxanne Austin, a current member of Target’s board of directors, interim non-executive chair of the board.
The company noted that the two would serve in their roles until permanent replacements are named, adding that Steinhafel will serve in an advisory capacity during this transition.
The board statement praised Steinhafel's 35-year career with Target, particularly pointing to his leadership through the recession and into Canada, as well as his work to address the breach of data by hackers that hit the company late last year. However, the expansion into Canada has proven more difficult than anticipated and the data breach has shaken consumer confidence in Target. In the meantime, Target's share price has trended down since last summer, when it peaked at $73.25 and has been trading below $64 since the beginning of this year, closing at $62.01 on Friday.
S&P Capital IQ analyst Efraim Levy, on Friday, and before the announcement about the Steinhafel departure, pointed out in a research note that Target's Canadian venture had so far proven "disappointing" but that problems related to the data breach ought to prove "manageable." In support of a buy recommendation on Target stock, Levy emphasized an improving economy in the United States as the major mover behind anticipated gains in Target's business, maintaining that revenues would gain only about 3.2% in fiscal 2015 and that comparable store sales gains would be "modest." The analyst added that the investment firm anticipates that earnings per share should improve significantly based on Target reversing losses in Canada.
In the fourth quarter, as it dealt with the data breach, Target reported that sales slipped 6.6% to $20.9 billion while earnings fell to $520 million, or 81 cents per diluted share, versus $961 million, or $1.47 per dilutes share, in the year-earlier period. Comparable store sales decreased by 2.5%. The retailer said that losses in its Canadian operation resulted in a 40-cent decrease in earnings per share.
In its statement, the board related that it had retained the firm Korn Ferry to advise it on a comprehensive CEO search.