Target (TGT 0.66%) is one of the largest retailers in the United States. Its main competitor is Walmart (WMT +0.53%), given that both operate similarly large stores. However, there is a significant performance gap right now, with Target struggling and Walmart thriving.
Here's why a CEO change at Target may not be enough to turn things around in 2026.
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What does Target do?
Target is a retailer with stores that sell a variety of items from kitchenware to food. It is a very large business, generating $25.3 billion in revenue in the third quarter of 2025 alone. That said, the company's approach is very particular, as it aims to offer a higher-quality experience to customers. That generally translates to nicer stores and more expensive merchandise than its main rival, Walmart, which focuses simply on offering low prices.
Being at the higher end of the market is a problem right now. To put a number on that, Target's sales fell 1.5% in the third quarter of 2025, with same-store sales off by 2.7%. In comparison, Walmart's sales have been growing quite strongly. In that same quarter, its top line grew 5.8% and its U.S. business benefited from a same-store sales advance of 4.5%.
The key driver of this divergence is that consumers are tightening their belts because of inflation and concerns about the economy. Walmart's "cheap" trumps Target's "premium experience" right now.
Target's new CEO can only do so much
Target is cognizant of the problem, and the board of directors has taken action by bringing in a new CEO. A 20-year veteran of the company, Michael Fiddelke has been able to hit the ground running. That's good news, and the stock has risen about 15% since the CEO change was announced.
NYSE: TGT
Key Data Points
However, further gains from this point will likely require a sustained improvement in the company's financial results. That seems like a tall order, given the company's positioning in the retail sector. Moreover, given Target's size as a business, any material changes will take time to roll out. And, thus, the benefits may not show up for several quarters, if not longer.
It is highly likely that Target will eventually get its business back on track. However, it seems unlikely that it will be able to turn on a dime. And an improving economy may be what the company really needs to convince customers to return to its stores. Target isn't a bad investment, per se, but you should probably view it as a long-term turnaround story. Notably, Target is a Dividend King with more than 50 annual dividend increases and still offers a historically high 4% dividend yield.
