"Today we are announcing that, after extensive discussions, the board and Gregg Steinhafel have decided that now is the right time for new leadership at Target," a company statement posted on its website Monday morning says.
Steinhafel also resigned as chairman of the board of directors. John Mulligan, Target's chief financial officer, will serve as interim president and CEO.
Steinhafel, a 35-year veteran of Target, will serve as an advisor during the transition.
In a letter to the board of directors, posted to Target's website today, Steinhafel said, "The last several months have tested Target in unprecedented ways. From the beginning, I have been committed to ensuring Target emerges from the data breach a better company, more focused on delivering for our guests."
Target said in December that hackers stole credit and debit card information from 40 million customers. In January it revealed that personal information like email addresses and phone numbers may have been stolen from up to an additional 70 million customers.
In the months since, Target adopted a faster timeline for switching to more secure chip-based credit and debit cards, and the payment terminals that accept them. As part of the $100 million effort, Target announced last week that it all of its store-branded cards would be reissued as MasterCard chip-and-pin cards in 2015.
Target also appointed a new chief information officer. Bob DeRodes takes over the position today after former CIO Beth Jacob resigned in March.
The data breach caused shoppers to lose faith in Target months after the event. In a Cowen & Co.’s Consumer Tracking Survey in March, it found “meaningful decreases” in year-over-year customer satisfaction with both the total shopping experience and customer service. Satisfaction with the overall shopping experience at Target was down almost 2 percentage points in March, with declines “most acute” among middle-and-upper-income shoppers, analyst Faye Landes said, adding the higher-income shoppers are “key cohorts for Target” and a group more likely to hold credit cards than lower-income shoppers.
The company’s Red cards, which give shoppers a 5% discount on most purchases, are key to its strategy to compete against rivals led by Wal-Mart Stores Inc. On customer service, Target’s scores dropped 3.3 percentage points to 71% with the score among upper-income shoppers falling a “dramatic” 9 percentage points to 70%, the survey of 2,500 shoppers showed. It also found that customer satisfaction with Target’s pricing, selection and product quality all declined from a year earlier.
“The obvious question is whether Target can regain the ground our survey indicates that it has lost with consumers,” said Landes, who rates Target underperform. “The answer may be yes but it is not only a matter of time but rather will entail efforts on the communication, marketing and product fronts as well as in store service. It’s apparent that significant issues linger.”
She said the decline in customer service may not be just due to the credit breach, but could be related to Target’s “ongoing efforts” to control expenses amid declines in traffic and sales.
Target’s credit rating was cut by S&P last week, as the rating firm said it expects the data breach to hurt the company’s traffic at least through the first half of the year.
Target spokeswoman Sarah VanNevel said the company is “taking extra steps” to win back shoppers. That includes providing limited-time deals like buy one and get one 50% off on swimwear and adding new merchandise including an upscale skin care collection.
Social analytics firm General Sentiment said sentiment surrounding Target on the web has returned to a positive 24 reading on average since March 15, compared with a positive 48 reading during the same period a year earlier.
In contrast, Target had a negative sentiment, at an average reading of minus 47, between Dec. 18 and Jan. 24 after the breach news. The reading was compiled from 1.65 million mentions across the web from Dec. 1 to April 1, General Sentiment said.
Separately, a YouGov BrandIndex measure of Target’s customer-perception level showed the level has returned to positive territory since Valentine’s Day and currently stood at a positive 12, meaning 12% more shoppers have a positive perception of the brand than those with negative perception. That compared with the reading of positive score of 25 to 30 on average before the breach. At its worst during the crisis, Target’s perception score plunged to a low of negative 35 on Jan. 13, YouGov said.