(Reuters) -Target’s appointment of company veteran Michael Fiddelke as CEO did little to enthuse Wall Street analysts as they were pinning their hopes on an outsider to put the struggling retailer back on track.
Shares of Target tumbled nearly 11% on Wednesday after the announcement. Fiddelke replaces Brian Cornell, who is set to retire as CEO later this year after nearly 10 years in the role.
“I know we’re not realizing our full potential right now and so I’m stepping into the role with a clear and urgent commitment to build new momentum in the business and get back to profitable growth,” Fiddelke said.
Here are some analyst reactions to Target’s long-planned CEO appointment:
Susannah Streeter, head of money and markets, Hargreaves Lansdown:
“Although Michael Fiddelke is likely to be seen as a safe pair of hands, having already overseen a big efficiency drive, the appointment appears to have seriously underwhelmed investors. There may have been hopes that a successor from a rival in the market could have brought extra knowledge, insight and energy, valuable assets at a time of intense competition.”
Michael Baker, DA Davidson analyst:
“Target went with an internal promotion as Brian Cornell officially announced long-expected retirement,” which was partly leading to the drop in its shares, said Baker.
“That is not a knock on new CEO Michael Fiddelke, who deserves a chance to prove himself. But, that announcement lacks the pop that a significant external hire would provide.”
Neil Saunders, managing director of research firm GlobalData:
“We have very mixed feelings about this appointment. While we think Fiddelke is talented and has a somewhat different take on things compared to current CEO Brian Cornell, this is an internal appointment that does not necessarily remedy the problems of entrenched group think and the inward-looking mindset that have plagued Target for years.”
Michael Lasser, analyst at UBS:
“Many in the market favored an external hire, arguing that would be the only way to re-energize this retailer and jump-start its strategic reinvention. Now, with the company’s decision to go internal, we think the market will now likely question how its trajectory could change meaningfully.”
Joe Feldman, analyst at Telsey Advisory Group:
“We are not surprised by the news, given Fiddelke had been groomed to become CEO, evidenced by his multiple leadership roles, including COO and CFO. We expect a smooth leadership transition, although we are unsure of how Fiddelke will change the strategy he helped create.”
(Reporting by Juveria Tabassum in Bengaluru; Editing by Anil D’Silva)
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