Target has entered a new phase of scrutiny from shareholders who are increasingly vocal about the company’s strategic direction, executive appointments and the risk that recent public decisions may have damaged its relationship with shoppers. Investors’ demands come as the retailer struggles to regain footing against competitors that have capitalized on a price-sensitive consumer environment.
Over the past five years Target’s profit has fallen by 14%, according to figures cited by investors. The company’s market capitalization has contracted to roughly $52 billion, roughly half of its 2021 peak, while peers such as Costco and Walmart have posted starkly different trajectories, with Costco’s market value cited at more than $430 billion and Walmart’s market cap topping $1 trillion.
Investor unease centers on multiple fronts. A coalition of 27 investors sent a letter on Friday to Target’s board and senior management expressing concern that a string of recent public-facing choices and communications could introduce reputational, operational and financial risks at a time the company is already confronting a difficult competitive and macroeconomic backdrop. The letter did not enumerate specific remedial steps, but it called for clarity on how the company assesses reputational risk and plans to prevent external pressures from undermining efforts to rebuild trust, drive traffic and shore up earnings.
The investor group, led by Trillium Asset Management and Mercy Investment Services, said the backlash from recent strategic adjustments has had measurable effects on customer loyalty and foot traffic. The letter links those adjustments to Target’s withdrawal from certain diversity, equity and inclusion programming and the company’s initial silence surrounding immigration enforcement activity at stores in the Minneapolis area, both of which investors say have contributed to lost sales.
Those concerns come as Michael Fiddelke settles into the CEO role he officially assumed on February 1. Fiddelke has said his near-term priorities include improving merchandise quality, value and style; delivering a consistent in-store and online shopper experience; and expanding the use of technology in operations. Investors will be listening closely when Target issues its quarterly results on March 3, where management is expected to lay out its execution plan.
Analysts and investors point to recent operational moves Fiddelke has already overseen. Since being named the company’s next CEO last August, Fiddelke implemented cuts of 1,800 corporate positions and announced $1 billion in planned store investments. He also reorganized senior merchandising roles, promoting two long-tenured executives to chief operating officer and chief merchandising officer, and added two new directors to the board.
Market watchers offered different readings of those efforts. Corey Tarlowe, an analyst at Jefferies, said the C-suite refresh improves execution potential and injects strategic momentum into the organization, reinforcing the view that the company is taking deliberate steps to position itself for a next chapter of growth. At the same time, critics argue that Target’s product assortment and in-store experience have eroded relative to competitors.
Former Target vice chairman Gerald Storch, who served in that role between 1993 and 2005, described what he sees on the ground as a loss of focus on everyday value. Shoppers have complained of out-of-stock items and long checkout lines, while the promotional cadence of buy-one-get-one offers and other temporary deals contrasts with the everyday low-price model that has benefited larger rivals.
Governance is another flashpoint. At least six investors representing roughly $500 million in combined Target shares, including the New York State Comptroller’s Office, the California State Teachers’ Retirement System and the California Public Employees’ Retirement System, have publicly supported a proposal from shareholder advocacy group The Accountability Board that would require future board chairs to be independent. The measure will be presented as a non-binding vote at Target’s annual meeting in June.
Shareholders are particularly uneasy about the decision to elevate former CEO Brian Cornell to executive chairman, a role that the investors say retains operational oversight and may limit the independence of board governance. Officials at the New York State Comptroller’s Office, which holds roughly $50 million in Target shares, have urged Cornell to give up his board seat, citing disappointment with the company’s retreat from diversity initiatives and the level of oversight surrounding those changes.
The push for an independent chair has precedent at Target: six similar proposals have been voted on since 2014, but none have passed, with the highest level of investor support recorded at 45.8% in 2014. Advocates for the current campaign say there is renewed momentum given the presence of an activist investor, which has added pressure on management to accelerate structural change.
Activist investor Toms Capital Investment Management took a roughly 0.6% stake in Target as of December 31, according to information cited by investors, and has signaled interest in turning around the company’s grocery business among other priorities. Toms Capital declined to comment, and co-founder Ben Pass did not respond to requests for comment.
Target, responding to investor questions about governance, updated its website to emphasize that all board members except Brian Cornell and Michael Fiddelke are independent under New York Stock Exchange standards, and that no other directors are current or former employees. The company also added a table listing the directors’ affiliations with other corporate boards.
Operationally, analysts expect a continued near-term headwind to comparable sales. LSEG data indicates same-store sales are forecast to fall by 2.65% for 2025. That projection, combined with the recent drop in profitability and ongoing market-share battles, frames the challenge facing management as it seeks to restore both shopper traffic and investor confidence.
For shareholders focused on governance and returns, the debate centers on whether leadership changes and the governance adjustments being proposed will be sufficient to arrest declines in customer loyalty and market value. For consumers and front-line employees, the key issues revolve around assortment, availability and the in-store experience. For the broader market, Target’s trajectory will be watched as an indicator of how mid-tier retailers navigate a pricing-focused environment dominated by companies with different business models and scale advantages.
What to watch next:
- Target’s March 3 earnings report, when the new CEO is expected to lay out priorities and execution plans.
- The non-binding shareholder vote in June on whether future board chairs should be independent.
- Any further operational announcements tied to store investments, merchandising changes, or cost structure adjustments.