Target CEO and TGT Stock
Since Gregg Steinhafel became Target CEO in May 2008, TGT stock has achieved a cumulative total return of 32% through May 2 — 23 percentage points less than the SPDR S&P 500 ETF (SPY). Over the past five years, TGT stock also has underperformed its discount store peers by 3.35 percentage points, though it’s even when compared to Walmart … which isn’t saying much.
Meanwhile, since Murphy has been at the helm of Gap, GPS stock’s total return is 135% compared to 44% for the SPY.
Whomever takes over at Target will have to do a serious sales job with investors. Since it publicly acknowledged the data breach Dec. 19, TGT stock has basically flat-lined, which actually isn’t half bad given this news story combined with the dreadfully poor results in Canada. In fact, the problem isn’t that TGT stock has declined precipitously, but rather that it’s dead money until these two situations appear in the rear-view mirror.
Thus, the new Target CEO will have to demonstrate to investors that the worst is behind it.
Again, while the data breach must be dealt with, the No. 1 issue facing the new Target CEO is getting Canada on a positive trajectory. All indications suggest that’s already underway, but it’s going to take several quarters of demonstrable success north of the 49th parallel before investors are willing to forgive TGT.
While I don’t think anyone at Target HQ left their offices Friday expecting Gregg Steinhafel’s resignation to happen, I don’t think it comes as much of a surprise, either. Things haven’t gone well (or poorly for that matter — just mediocre) for TGT stock in recent years, and it became too difficult for the board to ignore any longer.
Like in professional sports, when a team isn’t playing its best and a change is needed, the coach is usually the one to go; not the players. At 58, if Steinhafel wants another job, he likely won’t have to wait very long.
As of this writing, Will Ashworth did not hold a position in any of the aforementioned securities.