On October 23, Target (TGT) announced it would eliminate nearly 2,000 corporate jobs—1,000 current roles and 800 open positions—in a major overhaul led by incoming CEO Michael Fiddelke. While Fiddelke doesn’t officially take over until February 2026, he’s already making his mark as the architect of a turnaround plan aimed at simplifying operations, cutting bureaucracy, and speeding up decision-making. No store or supply chain roles will be affected, but corporate employees—especially managers—are feeling the heat, with leadership roles being eliminated at three times the rate of other jobs. The announcement, coupled with a temporary work-from-home policy during the transition, marks a defining moment for the retailer as it looks to reverse declining sales, sluggish traffic, and eroding market share. It’s the latest sign that Target is rethinking its playbook as it fights to regain relevance in an unforgiving retail landscape.
Target Is Getting Squeezed From Both Sides
Target’s middle-market position once gave it room to play offense with trendy assortments and stylish owned brands. But today, it’s stuck in a strategic no-man’s land. On one side, value-driven retailers like Walmart, Costco, and Aldi are winning over cost-conscious consumers with unmatched pricing power and leaner cost structures. On the other, Amazon and niche e-commerce platforms are devouring high-end demand with better speed, selection, and delivery.
Target’s attempt to do both—sell design-forward goods at an affordable price while scaling convenience—is proving harder than ever. Recent data shows Target has lost 100 basis points of share in hardlines and home furnishings since 2020. These were once margin-rich categories. But execution stumbles, inventory mismanagement, and tariff volatility have all chipped away at its competitive edge. Even beauty and essentials, where Target once held strong, have started to slip.
The bigger issue? Target doesn’t have the structural cost advantage or vendor leverage of its rivals. Walmart accounted for over 20% of General Mills’ sales in 2025. Target didn’t even crack double digits. This weak bargaining power means Target absorbs higher input costs without the cushion of scale—and that’s showing up in its margins and square-foot productivity.
Margin Pressure Isn’t Just Cyclical—It’s Structural
Target has long leaned on owned brands like Cat & Jack and Good & Gather to deliver higher margins—25% to 30% better than national labels. But that edge is starting to fade as competitors launch similar private-label strategies. Aldi, Costco, and even Amazon have closed the gap in design and pricing. The results are hard to ignore: since 2010, Target’s gross margin has compressed by 390 basis points. Walmart? Just 40.
Owned brands alone can’t offset the rising costs of doing business. Labor, tariffs, and capital investments are all eating into profitability. Meanwhile, as the mix shifts away from high-margin home and apparel toward staples and food, the math gets even tougher. Essentials bring more consistent traffic but dilute profitability. Target is trading margin for stability—and still losing share.
Roundel, its retail media arm, is a bright spot with 70% operating margins. But it’s small. At $650 million in annual revenue, Roundel contributes just 8% of Target’s EBIT. Walmart Connect, by comparison, generated $3.8 billion. Amazon Ads? $56 billion. So while Roundel’s growth matters, it’s nowhere near the scale needed to rescue the bottom line.
Execution Missteps Keep Adding Up
Target’s problems aren’t just competitive—they’re self-inflicted. The failed Canadian expansion in 2014 cost the company $4 billion. In 2022, a post-pandemic inventory glut led to massive markdowns and canceled orders, contributing to more share loss and shrinking margins. Six of the last ten quarters have seen negative traffic growth. Even now, management is playing catch-up.
The Enterprise Acceleration Office, a new initiative helmed by Fiddelke, is designed to address these problems by reworking decision-making processes, slashing bureaucracy, and embedding AI in everything from inventory forecasts to merchandising. It’s a big change—but a necessary one. The company recently issued over 10,000 AI licenses to streamline corporate workflows and remove manual bottlenecks.
But let’s be clear: AI isn’t a silver bullet. Fiddelke’s challenge is cultural as much as operational. He’s been with the company for 20 years and inherits an organization that has been reactive rather than proactive. The layoffs may reduce complexity, but they also risk disrupting continuity and morale at a critical time. With $4.8 billion in cash and $19.5 billion in debt, Target’s balance sheet can handle some turbulence—but there’s little room for more unforced errors.
Roundel & Target’s Store Network Offer A Glimmer Of Hope
Let’s not forget—Target has strengths. Its 2,000 stores double as fulfillment hubs, giving it a logistical edge in same-day and curbside pickup. That’s a cost-effective model in an e-commerce world where last-mile delivery eats into margins. Target Circle and its 45 owned brands help create stickiness, even if they’re not unbeatable moats.
Roundel, while still small, is growing at over 11% annually. If it captures just 3% of the retail media pie (up from 1.3% today), it could become a real profit center. Its access to higher-income shopper data is a plus, and its 70% margins are a much-needed counterweight to grocery and essentials.
Target also continues to reinvest in store remodels and tech, with capex expected to stay elevated at 4% of sales over the next two years. While these upgrades won’t redefine the brand, they’re essential for maintaining relevance. And as Fiddelke settles into the top job, investors should at least expect better execution—even if the playbook doesn’t change dramatically.
Final Thoughts: A Reset, Not A Revolution
Target’s latest job cuts mark a sharp pivot from its typical playbook. While it’s not a wholesale reinvention, it is a visible reset. The company is trying to simplify, streamline, and speed up—and it’s betting that a leaner, more agile organization can better navigate a brutally competitive landscape.
That said, the outlook remains mixed. The company lacks a structural moat, and its growth increasingly depends on flawless execution in categories where others offer more value or speed. Roundel and store-based fulfillment are legitimate strengths, but they don’t fundamentally shift Target’s competitive position.
Valuation helps put things in perspective. At a forward P/E of 12.15x and EV/EBITDA of 7.23x, Target is trading well below its historical averages and at a discount to wider retail peers. Its dividend yield is hovering near 5%, offering some downside support. But whether that valuation is attractive depends entirely on the success of this new chapter under Fiddelke.
For now, the story is less about reinvention and more about getting the basics right.
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