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Target's November/December comparable sales rose 1.4%, which the company said was below expectations.

Mark Schindele succeeds Jana Potts as Target’s chief stores officer

Discounter moves forward with two chief merchants, reports soft holiday sales growth

Target Corp. has named Mark Schindele as executive vice president and chief stores officer, succeeding Janna Potts, who is retiring.

Also on Wednesday, Target said it has formalized a dual leadership structure for its merchandising organization, with Christina Hennington and Jill Sando remaining in chief merchandising officer roles. The executive moves came as the Minneapolis-based discount store giant announced disappointing 2019 holiday season sales growth.

Schindele, previously senior vice president of properties, becomes chief stores officer and joins the executive leadership team effective immediately, Target said. Plans call for Potts to serve in an advisory role until May 1.

Mark Schindele-Target.jpgMark Schindele also now becomes part of Target's leadership team. (Photo courtesy of Target)

Joining Target in 1999 from Macy’s, Schindele held a range of leadership posts in merchandising, sourcing and operations before being named president of Target Canada in 2014. After Target Canada was shut down in 2015, he returned to Target’s U.S. business as senior VP of properties. In his new role as chief stores officer, Schindele oversees the operations of the Target’s nearly 1,900 stores and leads its more than 300,000 store associates.

A 30-year Target veteran, Potts served as executive VP and chief stores officer since 2016. She was promoted to that role after a one-year stint as senior VP of human resources. Previously, Potts had served less than a year as senior VP of stores and distribution at Target Canada and, before that, as senior VP of U.S. store operations. Potts joined Target in 1989 and has held various positions in stores, operations and human resources.  

Target credited Potts’ and Schindele’s efforts in driving recent changes at stores. The company said Potts served as the lead architect in the chainwide rollout of a new store operating model focused on improving customer service and growing digital sales via store-based delivery and pickup services. Meanwhile, Schindele led aggressive store remodel and small-format strategies that enhanced the shopping experience and helped Target penetrate densely populated market areas.

Janna Potts-Target.jpgJana Potts drove efforts to make digital a core component of store operations, Target said. (Photo courtesy of Target)

"Over the course of her 30 years with the company, Janna has made many significant contributions, including transforming the role our stores play in delivering for our guests in this new era of retail. We wish her the best as she prepares for retirement," Target Chairman and CEO Brian Cornell said in a statement. "As we look ahead, I'm confident Mark brings the right set of diverse experiences to realize even more potential for Target. His passion for retail, Target and our team, coupled with his understanding of our end-to-end business, make him well-positioned to lead our stores organization into 2020 and beyond."

On the merchandising side, Target said that going forward Hennington will serve as executive VP and chief merchandising officer of hardlines, essentials and capabilities and Jill Sando as executive VP and chief merchandising officer of style and owned brands. Both executives also joined Target’s leadership team.

In October, Hennington and Sando were named to those roles on an interim basis when Target announced the exit of chief merchant Mark Tritton, who left the company to become president and CEO of Bed Bath & Beyond. At the time, Target also appointed Michael Fiddelke as chief financial officer with the retirement of Cathy Smith.

Target noted that the dual merchandising leadership reflects the size, scale and complexity of its multicategory commercial businesses and operations. The company said Hennington and Sando will work closely with Stephanie Lundquist, executive VP and president of food and beverage, to develop and execute a unified merchandising strategy.

"Christina and Jill are seasoned leaders and incredibly talented merchants, and during their respective tenures, both have driven outstanding outcomes that compel guests to choose Target," according to Cornell. "The appointments we're making today with Mark, Christina and Jill underscore the expertise and deep bench of talent we continue to develop at Target, and I have every confidence in their ability to create opportunities that will fuel future growth for our company."

Despite Target’s robust financial performance, the retirement of Potts and other recent executive departures raise questions marks for the retailer, according to Jefferies analyst Christopher Mandeville. Besides Potts, Tritton and Smith, Target has lost Minosok Pak, chief strategy and innovation officer, who joined Mondelēz International on Jan. 13 as chief strategy and transformation officer.

“This announcement marks yet another exit of high-profile talent from Target following the departure of former CFO Cathy Smith and CMO Mark Tritton,” Mandeville wrote in a research note Wednesday. “We have to wonder if this recent exit of talent could somewhat disrupt the solid momentum we've seen from Target over the past year. However, today alone isn't enough for us to believe this will be the case just yet.”

Target Corp.Brian Cornell-Target 2019 holiday sales.jpg

"While we knew this season was going be challenging, it was even more challenging than we expected," Target Chairman and CEO Brian Cornell said.

Sales for the 2019 November/December holiday period came in below expectations, Target reported Wednesday. Comparable sales inched up 1.4% year over year, compared with a 5.7% gain for the 2018 holiday period. The company said comp sales rose 3% in food and beverages, 6% in essentials and beauty, and 5% in apparel, while results were flat for toys and down by single digits in home, hardlines and electronics.

Digital sales remained a bright spot, with November/December comps up 19% year over year, fueled by more than 50% growth in Shipt home delivery and Drive Up and Order Pick Up click-and-collect sales.

Target said it now expects fourth-quarter 2019 comp-sales growth in line with the November/December performance of 1.4%.

“We faced challenges throughout November and December in key seasonal merchandise categories, and our holiday sales did not meet our expectations,” Cornell stated. “However, because of the durability of our business model, we are maintaining our guidance for our fourth-quarter earnings per share. We also remain on track to deliver historically strong full-year results in 2019, including comparable sales growth of more than 3% and record-high EPS reflecting mid-teens growth compared with last year.”

Holiday comp-sales growth was fueled mainly by traffic, along with a small increase in average ticket, Target reported.

“After three strong quarters this year and a record-breaking holiday season in 2018, we had some really ambitious plans heading into the season. While we knew this season was going be challenging, it was even more challenging than we expected,” Cornell said in a Q&A on Target’s holiday performance, which he described as a “tough miss.”

“That said, we’ve built a financial model that — despite the softer sales — still delivered on the bottom line because of a strong gross margin mix, the unique role our stores played in digital fulfillment, and our incredibly clean inventory position closing out the holidays,” he added. “Today, we’re on track to deliver a historically strong full-year financial performance — hitting every one of our financial goals for 2019 — growth in operating income and EPS, as well as our 11th-straight quarter of positive comp growth.”

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