Target’s New Captain & The Dividend Seas

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So, Target. A place many of us, I suspect, have wandered into intending to buy, say, toothpaste, and emerged somehow with a patio set, a vaguely unsettling garden gnome, and a profound sense of having lost several hours. It’s a retail marvel, really. And recently, it’s undergone a bit of a shuffle at the top. Brian Cornell, who steered the ship for a good while, handed the helm to Michael Fiddelke on February 2nd. Fiddelke, a Target veteran of over two decades, was previously the COO – which, if you think about it, is a bit like being the ship’s first mate suddenly finding himself in charge of navigating a particularly choppy sea.

Now, for those of us who like to see a bit of steady growth with our shopping – and, crucially, a reliable dividend – Target’s recent performance hasn’t been exactly smooth sailing. The stock stumbled nearly 40% over the last five years. That’s a bit like investing in a promising vineyard only to discover it’s located in a perpetual hailstorm. Let’s unpack what’s been happening, and whether Fiddelke might just be the captain to right the ship.

What Ails Target?

Target remains a behemoth, with 1,989 stores scattered across the US. Remarkably, more than three-quarters of the US population lives within ten miles of one. That’s a lot of potential customers, though proximity doesn’t automatically translate to purchases, does it? It’s like being next to a gold mine but lacking the tools to extract the gold.

Back in 2020, during the early days of the pandemic, Target enjoyed a rather unexpected surge. Sales soared nearly 20%. Everyone was home, apparently desperate for throw pillows and scented candles. But that initial boost faded. Growth slowed to a respectable 12.7% in 2021, then dwindled to a mere 2.2% in 2022. 2023 saw a decline of 3.7%, and 2024 barely registered any growth at all (0.1%). More recently, the first three quarters of 2025 have also been down, with expectations of a “low-single digit” decline for the full year. It’s a bit like watching a beautifully constructed sandcastle slowly being eroded by the tide.

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Several factors are at play here. Inflation, naturally, is squeezing everyone’s budgets. Competition is fierce. Sales of larger items – appliances, TVs, patio furniture – have been sluggish. Supply chain disruptions continue to be a headache. And then there’s “shrink” – a polite term for shoplifting, which is, shall we say, a rather less polite problem. Oh, and let’s not forget the boycotts, triggered by Target’s decisions regarding diversity initiatives and merchandise. It’s a complicated mess, really. A bit like trying to assemble a flat-pack wardrobe with missing instructions and a slightly wonky screwdriver.

All this has led to Target relying heavily on markdowns to clear inventory, which, predictably, has squeezed profit margins. Earnings per share (EPS) grew at a rather anemic 0.6% annually from 2020 to 2024, and analysts predict an 11% decline in 2025. Not exactly the kind of performance that inspires confidence in the dividend hunter.

Fiddelke’s Plan: Charting a New Course?

Before handing over the reins, Cornell launched a five-year plan aimed at generating at least $15 billion in fresh sales by 2030. Ambitious, certainly. The plan involves expanding the e-commerce marketplace, upgrading AI-powered pricing tools, “reimagining” product categories, and offering perks to loyal customers. It’s all rather modern and tech-focused, which is fine, but sometimes one wonders if a nice cup of tea and a friendly face might be equally effective.

Fiddelke is likely to continue with this long-term strategy. But he’s already made some immediate changes: a shake-up of the executive teams, the elimination of 500 corporate roles, and an increase in staffing in some stores to improve customer service. He also wants Target to differentiate itself through carefully curated products. It’s a sensible approach, though the success of any such plan hinges on execution. And, of course, a little bit of luck. After all, even the most skilled captain can’t control the weather.

For those of us watching from the sidelines, hoping for a steady return on our investment, it’s a time for cautious optimism. Whether Fiddelke can navigate these choppy waters and steer Target towards calmer seas remains to be seen. But one thing is certain: the retail landscape is ever-changing, and only the most adaptable companies will thrive.

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2026-02-20 23:13