arget Chief Executive Officer Gregg Steinhafel, dogged by a holiday-season data breach that exposed the personal information of tens of millions of shoppers, stepped down as chairman, president and CEO.
John Mulligan, Target’s chief financial officer, is serving as interim CEO while the company seeks a permanent replacement, the company announced Monday. Board member Roxanne Austin, a former DirecTV executive, will be interim chairwoman.
Steinhafel, a 35-year Target employee, had been working to regain customers’ loyalty after hackers stole card data and personal information at the height of the Christmas season last year. The company previously replaced its top technology executive. The retailer’s Canadian expansion also has struggled to gain a foothold, weighing on profit.
“They need some fresh blood at the top that can facilitate some change,” said Joe Feldman, a New York-based analyst at Telsey Advisory Group. “They wanted to clear the slate and get it out there that they’re hearing investor calls for a new change at the company.”
After the attack became public in December, Target’s reputation and sales took a hit. The company’s U.S. comparable-store sales decreased 2.5 percent in the fourth quarter. With more than 1,900 stores in North America, the company is the U.S.’s second-largest discount retailer, behind Wal-Mart Stores Inc.
Target shares have fallen about 12 percent in the past 12 months.
In March, Target told a Senate panel that it had clues about the attack weeks before responding and was exploring why it took so long to react. The hearing followed a report by Bloomberg Businessweek that found Target ignored warnings from its hacker-detection tools.
When Steinhafel was rising up through Target’s merchandising ranks, he played a key role in helping the chain differentiate itself from Wal-Mart. In the early 1990s, he revamped its selection, forged partnerships with well-known designers and focused on higher-income shoppers.
In recent years, the company has suffered missteps, including its push into Canada. Canadians, who for years had shopped at Target stores just over the border in the U.S., have been disappointed that prices in Canada are higher. Local competitors also cut their prices to make Target’s entry more difficult. The operation lost $941 million before interest and taxes in 2013, reducing the year’s profit by $1.13 a share.
Steinhafel is entitled to severance payments, Target said in a separate filing today. According to the company’s proxy statement last year, the executive was eligible for about $9.26 million if he left voluntarily and about $26.6 million if it was involuntary but not for cause.