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US retail chain Target is facing pressure from an activist investor after a sales slump that has wiped out nearly a third of its share value this year, according to people familiar with the details.
Toms Capital Investment Management, a US hedge fund that built a stake in Tylenol maker Kenvue before its $48.7bn sale to Kimberly-Clark last month, has made a significant investment in Target, the people said. The exact size of TCIM’s stake is unknown. Target had a $43.7bn market capitalisation as of Wednesday’s close.
The pressure comes after Target in November reported its 12th consecutive quarter of negative or negligible sales growth. Target’s share price is down 64 per cent from its all-time high during the Covid-19 pandemic, when customers flocked to it as a one-stop shop for necessities, clothes and home goods. It has underperformed the wider retail sector.
TCIM declined to comment. Founded by alumni of London-based hedge fund GLG Partners in 2017, it has recently built stakes and pushed for strategic changes at Pringles maker Kellanova, US Steel and Kenvue.
Target said in a statement that it maintained a “regular dialogue” with all of its shareholders.
“Target’s top priority is getting back to growth, and our strategy to do so is rooted in three strategic priorities: leading with merchandising authority, providing a consistently elevated shopping experience and leveraging technology,” the company said. “We are confident the execution of this plan will drive the business forward and deliver sustained, long-term value for shareholders.”
Target’s longtime chief executive Brian Cornell plans to step down in February after more than a decade in the top job. He is being replaced by chief operating officer Michael Fiddelke, who after 23 years at the retailer has been tasked with orchestrating a major overhaul.
Fiddelke told investors last month that Target would spend $5bn in 2026, roughly $1bn more than this year, on improvements such as store renovations, product refreshes and a better digital experience. “We are not satisfied with our current results and are relentless in our pursuit of returning to growth,” he said on November’s investor call.
Analysts have highlighted Target’s advantages: 75 per cent of the US population live within 10 miles of its nearly 2,000 stores, second only to Walmart, and it owns 78 per cent of its stores. A recent UBS analyst report noted how Target could monetise its real estate in a similar way to US farm supply retailer Tractor Supply.
Yet consumers have become more cautious about spending, and Target, which relies more on discretionary goods such as decor, has been hit harder than rivals. Walmart’s share price is close to a record high, giving it a market capitalisation of almost $900bn, while the share price of warehouse club store Costco has more than doubled over the past five years.
In October, Target cut 1,000 roles and a further 800 open positions at its headquarters in Minneapolis, Minnesota. The job losses accounted for about 8 per cent of its 22,000 corporate employees.
With about half of its merchandise sourced from outside the US — China is its main source of imported products — it has been hit by US President Donald Trump’s sweeping tariffs.
While the tariffs have increased the cost of merchandise, Target lowered prices for 3,000 household essentials during the holiday shopping season.
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