Michael Fiddelke — who began as an intern in Target Corp.’s finance department and is due to become chief executive officer in February — is getting ready to hit the ground running, pumping another $1 billion into the shopping experience.
Even though the company’s third-quarter results came in largely as expected, Fiddelke’s still going to have to get up to speed quickly if the retailer is to regain some of its old “Tar-Jay” magic.
Net earnings fell 19.3 percent to $689 million for the three months ended Nov. 1, which included $120 million in business transformation costs, after tax. Target eliminated 1,800 corporate jobs last month in an effort to remove complexity and enable quicker decision-making.
Adjusted earnings per share tallied $1.78, above the $1.71 analysts had penciled in, according to Yahoo Finance.
Net sales slipped 1.5 percent to $25.3 billion, with a 1.9 percent decline in merchandise sales offset by a 17.7 percent boost to other revenues, including membership fees and digital marketplace revenues. Comparable sales fell 2.7 percent in the quarter, with comps in the stores falling 3.8 percent and digital sales comping up 2.4 percent.
“As we head into the all-important holiday season, our team is well-prepared and ready to serve our guests with the great products, value, and inspiration they expect from Target,” Fiddelke said in a statement.
Target’s incoming CEO Michael Fiddelke.
The incoming CEO is focusing on three priorities:
- Leading with design and expanding the company’s merchandising authority.
- Elevating the shopping experience in stores and online.
- Accelerating the use of technology to rev up speed, guest experience and efficiency throughout the business.
Target revealed that it plans to increase its capital expenditures by 25 percent to $5 billion next year with an eye toward “accelerating our merchandising and store experience plans.”
“Expect us to remodel and refresh more stores and some of the biggest changes in major assortment categories we’ve had in years,” the company said. “We’re evolving our stores-as-hubs model to improve the in-store experience and offer next-day shipping for more than 50 percent of the U.S. population.”
In over 35 markets, Target said it would adjust shipping to stores that can handle high volumes, freeing up associates in high-traffic stores to help shoppers and keep goods in stock.
For the full year, the company is now looking for earnings of $7 to $8 a share, narrowing the range from the $7 to $9 previously projected, but still in line with the $7.27 analysts forecast.
Comparable sales are expected to register a single-digit decline for the year.
Brian Cornell, who has led Target for 11 years as CEO, is staying on as executive chairman.
