What The Target Shake-Up Means
Yesterday’s news that Target Canada president Tony Fisher has been ousted certainly adds to the storyline of doom. But one analyst points out the reverse of such a move.
The moves make it clear that Target is not exiting Canada, “putting to rest that crazy notion, ” CIBC World Markets Corp retail analyst Perry Caicco tells us. Expect more aggressive pricing in the second half of 2014, Perry says, because the new company prez is a merchant, and pricing has been identified as a problem. The company also plans to name a non-executive chairman in Canada, who Perry expects to be a big name Canadian. And he anticipates a focus away from capital investment and further expansion of stores. Pictured: the Delta store.
As for that new Target Canada president, it's Mark Schindele, who was previously SVP of merchandising operations at Target Corp. That other non-executive chairman role will offer "counsel and support to the president" to ensure all strategies and tactics align with the Canadian marketplace, the company said in a statement.
Colliers director of retail consulting James Smerdon says the new Canadian boss will have a “very broad mandate to right the ship.” This morning’s earnings report showing small gains in revenues is all well and good but “I think they will want more than small gains.” The stores under construction will likely get built, James says, but in the new year, once holidays sales are in, “we might see selective store closures.” He adds, “strong revenue gains can fix all of the problems at Target Canada.”
The company reported a $1B operating loss the first year up here, as it has aggressively opened 127 stores, with more scheduled to follow. The company this morning reported a surge in sales in Canada in the first quarter (the colder winter months were a killer, although April was stronger) but an operating loss for Q1 of $211M, up from $205M a year earlier. Sales jumped to $393M from $86M a year earlier, keeping in mind they only had 24 stores open during the same period a year ago.
