Target CEO Brian Cornell is stepping down after 11 years at the retailer, as the company faces slumping sales and backlash to its retreat on DEI.

Cornell’s departure was widely expected. Some industry analysts believed Target should bring in an outside voice to lead the company, but it opted for an internal candidate: Cornell will be replaced on February 1, 2026, by Michael Fiddelke, Target’s current chief operating officer. Fiddelke started as an intern at Target and has been at the company for 20 years.

Fiddelke was chosen from a “strong list of external and internal candidates,” Cornell said on a call with analysts Wednesday, adding that he is the “right candidate to lead our business back to growth.”

Cornell will stay on as executive chairman. He took over in 2014 and revitalized Target, overseeing a strategy to remodel stores and strengthen the chain’s online business to compete with Amazon.

But Target has been in a deep slump for years, a result largely of its own strategic missteps. The company has struggled as customers have purchased less of its home goods and clothing. Target has also faced intense competition from Walmart, Amazon and Costco.

Target on Wednesday reported sales fell for the third-straight quarter. Shares fell 10% in premarket trading. Target’s (TGT) stock is among the worst performing companies in the S&P 500 this year.

Target’s stock drop reflects many investors’ belief that the chain needed to go in a new direction with its choice of CEO. Some analysts criticized Target’s board for choosing an insider who has helped develop Target’s current strategy.

“This an internal appointment that does not necessarily remedy the problems of entrenched groupthink and the inward-looking mindset that have plagued Target for years,” Neil Saunders, an analyst at GlobalData Retail, said in a note to clients Wednesday. “Target, which used to be very attuned to consumer demand, has lost its grip on delivering for the American shopper.”

DEI retreat and shopper slowdown

The last three years have been unkind to target, but 2025 has been particularly tumultuous.

Earlier this year, the company ended some of its DEI programs. The decision angered supporters of diversity and inclusion policies, who felt blindsided by Target. Customers online protested Target’s decision, and Anne and Lucy Dayton, the daughters of one of Target’s co-founders, called the company’s actions “a betrayal.” Target acknowledged its move hurt its sales.

“People re-evaluated and started driving extra miles to go to other places,” Rev. Jamal Bryant, who led a boycott against Target, told CNN. “We felt like it was a stark betrayal.”

Target wasn’t the only company to roll back DEI policies, but came under more pressure because it had more deeply ingrained diversity and inclusion programs into the core of its business. Target also has a more progressive base of customers than many competitors.

Tariffs and a consumer slowdown have put even more pressure on Target.

Target is known for its trendier items, and the chain stocks more nonessential merchandise than its competitors. More than half of Target’s merchandise is discretionary.

But that merchandise has slumped as shoppers spend more on essentials such as food and household basics. Around half of Walmart’s business, for example, comes from groceries.

Target also imports about half of its merchandise, compared to roughly 33% at Walmart, so it needs to raise prices at almost double the rate of Walmart to mitigate the tariff impact, Bank of America analyst Robert Ohmes said in a report this week.

Rocky tenure

Target’s recent struggles are a reversal of Cornell’s early years at the retailer.

In 2018, Target reported its best results in a decade. The following year, Cornell was named CNN Business’ CEO of the Year for leading a turnaround at Target. The company thrived at a time when many brick-and-mortar stores were closing.

“Target has earned a place in the retail winners’ circle by investing in our business and staying true to our guests and our purpose,” Cornell told CNN in 2019.

Target also boomed during the pandemic in 2020 and 2021 as shoppers rushed to stores to purchase essentials, home goods, office supplies and other merchandise. The company’s home goods also proved popular as stuck-at-home Americans looked to improve their living spaces when they couldn’t venture outside.

But Target began to falter in 2022. The chain bought too much merchandise, so it had to deal with a glut of unsold inventory just as decades-high inflation pressured the wallets of many of its shoppers. Post-pandemic, shoppers stopped buying up treadmills, TVs and home goods – especially as inflation started to bite.

A year later, activists and customers on the right attacked Target on social media for its LGBTQ-themed merchandise during Pride Month. Target employees faced threats over items such as bathing suits designed for transgender people, and the company removed them from stores. Misinformation spread on social media that the swimsuits were marketed to children, which they were not.

The backlash led to a drop in sales and lawsuits from Republican-aligned legal groups.

‘We must improve’

Fiddelke said Target “must improve” and the company is “not realizing our full potential right now” on a call with analysts Wednesday.

He outlined a plan to bring trendier merchandise to Target, make its stores more appealing to visit and to invest in technology. This includes an initiative called “Fun 101,” which seeks to capitalize on the latest trends for electronics and home goods.

The company has been able to navigate tariffs so far, he said, and will raise prices as a last resort. Target has changed some of its merchandise selection to mitigate the impact of tariffs.

Analysts are mixed as to whether Target’s issues are easily solvable or if drastic changes are necessary to revive to the business.

“Target’s long-term outlook is deteriorating,” Ohmes said. “Target is falling behind peers and has tougher challenges.”