Criticism of Target follows poor earnings report
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Target's headquarters. Photo: AaronP/Bauer-Griffin/GC Images
A year of poor performance has fueled a chorus of criticism of Target's management team.
What they're saying: "Shoppers are falling out of love with Target," the Wall Street Journal wrote in its Tuesday story about the Minneapolis-based retailer's problems.
- Daiwa Capital on Tuesday joined several analysts in downgrading Target's stock, which fell by 21% last week.
Why it matters: An earnings miss as big as the one Target suffered last week could lead to a shakeup, with industry speculation about the future of CEO Brian Cornell, potential activist investors or even an acquisition of the company by private equity.
Catch up quick: Target shoppers voiced their frustrations to the Wall Street Journal: out-of-stock shelves, long checkout lines, products locked up in certain stores, lower prices at competitors and even lingering unhappiness over the company's Pride month collection in 2023.
- There's evidence that it's losing market share to Walmart.
The other side: Target told the newspaper that sales are up about 36% since 2019 and noted customers have given the company higher marks in internal surveys on service, checkout times, product availability and store cleanliness.
The intrigue: "Target's beginning to look like a juicy (leveraged buyout) target, or at a minimum, they're going to have an activist (investor) in there," New York University marketing professor Scott Galloway predicted on his podcast.
Reality check: With an enterprise value of $72 billion, a leveraged buyout of Target would likely be the largest in history, a fact that Galloway acknowledged.
- Plus, private equity also shown a growing aversion to retail, particularly big-box stores like Target.
Plus: Galloway said Cornell, Target's CEO of 10 years, has been "mediocre" running the company, noting he would be shocked if Cornell was not fired soon.
- Target's board in September 2022 eliminated its mandatory retirement policy (age 65) to allow Cornell, then 63, to stay for at least three more years.
Target declined to comment on the buyout speculation.
The bottom line: This isn't the first prediction of a Target acquisition. Gene Munster, the high-profile analyst based in Minneapolis, speculated in 2017 that Amazon would buy the retailer.
- It never happened (at least not yet).