Jeff Macke
Jeff Macke

UPDATE: Target Report Card and Trade Idea

Looking for a way to profit of the Street's (and my own) disappointment
August 20, 2025

With shares down over 60% over the last 4 years, earnings declining and a CEO set to retire Target had a chance to make dramatic changes. Instead, the discount retailer made the most obvious, timid, decision possible, announcing 20-year company veteran Michael Fiddelke will become CEO when Brian Cornell retires next February.

Fiddelke is currently Target's Chief Operating Officer. Fiddelke made his public debut, of sorts, when he was installed as head of the newly created Enterprise Acceleration Office last May. The very existence of an Enterprise Acceleration Office was weird. Target's sales peaked in 2021. The company is obviously, demonstrably, going in the wrong direction on earnings, revenues, comps and "vibe". 

Target needs an agent of change. A turnaround plan. Fiddelke's appointment was a vow to Stay the Course with what's not working now and try to go even faster. Shares are down 5-10% early not because Fiddelke himself is so offensive but because hiring from within suggests Target doesn't know the company is lost. Target needed a kick in the ass from the board of directors. It got a glass of warm milk, instead.

Unacceptable. 

Final Grade: D

 

d

 

Trade: Buy Target with a Stop on a close below $90

Off the call with Target, which went about as expected. Incoming CEO Michael Fiddelke seems smart and is engaged. He clearly understands the mission and need for a 1. Better Merchandising 2. Better Store Experience 3. Getting back to growth.

Change is good for Target right now. The more Fiddelke can be proactive in messaging and deed the less it will matter if Brian Cornell is hanging on until the beginning of February. This is a nice window of opportunity for Target. Wall Street would actually welcome Fiddelke spending money if it means better stores and execution. Target shares are near the April 8th lows. The stock has priced in negative comps for the balance of the year and a disappointing succession plan. If (likely when) Target misses next quarter it will be seen as part of the Medicine Target needs to get on track.

I don't expect downgrades coming out of this report and the consumer is showing up for $TJX and $LOW, suggesting there's enough demand for Target to get back in the race.

I like taking a bite here as Wall Street is getting to know the new team better. Use a stop at the April lows. It's going to take something very bad indeed to break $TGT as a stock more than it's already broken.

 

tgt
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