Hightower Advisors Chief Investment Strategist Stephanie Link says U.S. retailer Target is entering a turnaround phase. In her view, the company, which operates more than 2,000 stores across the United States, is heading into the crucial holiday shopping season with improving momentum as consumers continue to spend while placing greater emphasis on value.
Link argues that the shift began under new CEO Michael Fiddelke, who took over in February. He is not new to the company: he started as an intern, later served as CFO and COO, and is now leading the overhaul. Under his leadership, Target has outlined an investment plan of roughly $6 billion for this year, focused on opening and remodeling stores, improving the supply chain, and allocating more resources to store employees.
The management team has also been reshaped. Earlier this year Target named a new COO, brought in a new chief supply chain officer in May, and more recently hired a new chief marketing and guest experience officer. Link views those appointments as part of a broader effort to restore execution and improve the customer experience.
According to the investor, some of the changes are already visible in stores. Target is directing more money toward payroll and training, with greater emphasis on frontline staff responsible for stocking shelves and keeping locations running smoothly. She says the retailer’s problems were not only about merchandise selection: stores were not always adequately stocked or staffed, which undermined the shopping experience.
The operating numbers are also beginning to improve. Comparable sales rose 3.8% in the last quarter, while traffic increased 3.6%. In Link’s reading, that shows more shoppers are returning to Target and spending more once they are there.
She also says the company is investing in its brand again. In her view, Target underinvested in marketing for years, weakening its brand positioning. Management is now stepping up brand marketing and sharpening its message around trend-forward products, exclusive partnerships, good design, and affordable prices.
Technology is also being used to support that strategy. Target is investing in AI and personalization tools to help shoppers discover more relevant products, and management says some of those systems are already helping digital conversion.
Profitability is improving as well, although the latest quarter benefited from a sizable tariff refund. Even excluding that, Link says margins are moving in the right direction. She estimates that Target could earn roughly $9 to $11 per share over the next year to year and a half.
Target shares have risen more than 61% this year as investors have started to recognize signs of a turnaround. Even so, the stock remains about 40% below its 2021 high. Link believes there is still further upside if earnings continue to improve.
Her bottom line is that Target fits her preferred investment setup: a strong brand that has fallen out of favor but is being repositioned by new management making the right moves. She says decision-making is improving, management is willing to take risks, and Target is becoming a destination for shoppers again.
