Good morning. Target is still in the process of selecting its next CFO, but both the CEO and the current finance chief are eager to have someone step into the role.
Michael Fiddelke, who has been Target’s CFO since November 1, 2019, was appointed chief operating officer effective February 4. Until a new CFO is appointed, Fiddelke continues to fulfill his CFO duties. During Target’s Q2 earnings call on Wednesday, CEO Brian Cornell highlighted that Fiddelke’s move into the critical COO role was announced in January.
“Michael stepped into the CFO role just before the pandemic and has excelled in guiding the company through a period of extraordinary growth and volatility,” Cornell said. The search for Fiddelke’s successor as CFO is ongoing, and Cornell added, “I share Michael’s enthusiasm for the day when he can fully concentrate on leading all of our operational functions.”
Fiddelke acknowledged on the call that he is “temporarily wearing two hats.”
He added, “While I look forward to the time when I can focus solely on the COO role, I’m fortunate to work with exceptionally talented leaders and teams who are operating with a guest-first, long-term mindset that drives our results.”
In the second quarter, comparable sales across stores and digital channels increased by 2% year over year, which was at the high end of Target’s expectations. This is a positive shift from Q1, where sales had declined by 3.7%. Total net earnings for the quarter reached $1.1 billion, up from $835 million in the same period last year, while total revenues rose 3% year over year to $25.45 billion from $24.77 billion. Cornell attributed the growth in Q2 entirely to increased traffic in stores and digital channels, with double-digit growth in same-day delivery services.
For the full year, Target has raised its EPS guidance range to $9 to $9.70, up from $8.60 to $9.60. The company’s stock price surged on Wednesday, closing about 11% higher.
‘A deep understanding of the industry’s challenges’ The new CFO will be crucial in maintaining this momentum. According to Shawn Cole, president and founding partner of Cowen Partners, an executive search firm focused on C-suite roles, Target is “highly regarded” and should have no difficulty attracting top talent. The average CFO search typically lasts six to nine months, but Cole believes Target will secure a new finance chief in less time.
The ideal candidate would have extensive experience in retail finance, with a thorough understanding of the industry’s challenges, such as low margins, high inventory turnover, and supply chain complexities, Cole said. The board is likely looking for someone with a strong background in senior financial roles at large, omni-channel retailers with e-commerce experience, along with a proven track record in cost optimization, supply chain efficiency, and budget management.
“Experience in leading financial strategy through transformation, including digital innovation and market expansion, is essential,” Cole said, adding that the ability to align financial strategy with operational goals is also key.
In May, Target announced price reductions on 5,000 frequently purchased items. The company stated in May that it “routinely adjusts its prices to remain competitive within the markets it serves.” In an interview with CNBC on Wednesday, Cornell was asked about price gouging in reference to Vice President Kamala Harris’ proposed federal ban on “corporate price-gouging in the food and grocery industries.” Cornell responded by highlighting the narrow profit margins in the retail industry, especially compared to sectors like technology.
Fiddelke, who has been with Target for 20 years and started as an intern, has held various roles across the company. As COO, he stated during the earnings call that the operations team is focused on reinforcing retail fundamentals “following an extended period of unprecedented volatility that began more than four years ago.”
Sheryl Estrada
sheryl.estrada@fortune.com
The following sections of CFO Daily were curated by Greg McKenna.
Leaderboard
Cameron Jones has been appointed CFO of the NBA Players Association, Bloomberg reported. Jones joins from Storyblocks, a video creation platform where he served as CFO. He has also been CFO of Megaphone, a podcasting and audio business owned by Spotify, and has held positions at NPR and The Washington Post.
Josh Baugher has been promoted to CFO of Argan (NYSE: AGX), an energy services company, effective September 15. He will succeed Richard H. Deily, who is retiring after 17 years with the company. Baugher has been a VP and corporate controller at Argan since 2022 and previously managed financial reporting and technical accounting at Charles River Associates, an international consulting firm.
Big Deal
As the 2024 election approaches, only 38% of Americans believe businesses should generally take public stances, according to a new Gallup poll. Support for businesses commenting on current events has decreased across nearly all demographics over the past two years.
However, not all issues are viewed equally. Slight majorities of U.S. adults want businesses to address climate change (54%), mental health (53%), and diversity, equity, and inclusion (53%). In contrast, divisive topics like gun laws (32%), immigration policy (31%), international conflicts (24%), abortion (20%), and the candidates themselves (17%) have significantly less support.
Going deeper
A new report in Wharton’s business journal, “How We Can Harness AI to Fulfill Our Potential,” by visiting scholar Cornelia Walther, discusses the four key assets needed to protect personal agency and critical thinking as AI becomes more integrated into our lives.
Overheard
“Today’s BLS report, indicating that labor market strength is weaker than projected by monthly reports, supports the futures market’s view that the Fed will cut rates during its September 18 meeting.”
