(Corrects paragraph 19 to fix name of former CIO to Beth Jacob
from Beth Gladstone)
By Siddharth Cavale and Jim Finkle
May 5 Target Corp removed Chairman and
Chief Executive Gregg Steinhafel on Monday in the wake of a
devastating data breach that hurt the No. 3 U.S. retailer's
profits, shook customer confidence in the company and prompted
The departure of the 35-year company veteran also follows
Target's botched multi-billion dollar expansion into Canada.
"After extensive discussions, the board and Gregg Steinhafel
have decided that now is the right time for new leadership at
Target," the company's board said in a statement.
Steinhafel, 59, had been Target's CEO since 2008.
The Minneapolis-based company named Chief Financial Officer
John Mulligan as interim chief executive, and Roxanne Austin, a
member of Target's board of directors, as interim non-executive
chair of the board.
Target's shares fell as much as 3 percent in morning
Brian Sozzi, chief executive of Belus Capital Advisors, said
he thought Steinhafel's exit was a few months overdue. "I think
the news today reflects Target's initiative to completely get
behind this issue," he said, referring to the data breach.
Target disclosed in December that a cyber attack had
resulted in the theft of at least 40 million payment card
numbers and 70 million other pieces of customer data.
Mulligan has been the company's chief spokesman on the
issue, testifying at several congressional hearings where he was
grilled for details about Target's security operations, how it
learned of the breach and how quickly it notified the public.
Target spokeswoman Dustee Jenkins said Mulligan had been
selected as interim CEO because of his role in helping company
respond to the breach. "We believe he is suited for this. He has
played a key role in the recovery efforts," she said.
The company said it has hired executive recruiting firm Korn
Ferry to help the board find a new CEO.
Apart from the breach, Target has had to negotiate a weak
U.S. retail environment.
The company's push into Canada has also proven to be
costlier than expected and sales have fallen far short of
expectations. The company reported a loss of nearly $1 billion
in Canada in 2013 on sales of $1.3 billion.
Overall, the company reported a 34 percent drop in net
profit last year to $1.97 billion.
Analyst Ken Perkins of investment research firm Morningstar
said the performance in Canada would have contributed to
"Clearly the data breach was not good publicity ... but in
terms of an executive decision from a strategy point, the entry
in Canada has really not gone the way company planned," he said.
The breach at Target was the second largest at a U.S.
retailer. The theft of more than 90 million credit card details
over about 18 months was uncovered in 2007 at TJX Cos Inc
, operator of the T.J. Maxx and Marshalls chains.
Steinhafel's exit follows the departure of Chief Information
Officer Beth Jacob in March.
The company last week named high-profile information
technology consultant Bob DeRodes as her replacement.
. Target is still looking for a chief information
security officer, a new role.
Target's shares were down 3.1 percent at $60.11 in morning
trading. In the year up to Friday's close, the stock had fallen
13.8 percent, while the S&P 500 rose 15.6 percent.
(Reporting by Jim Finkle in Boston and Siddharth Cavale in
Bangalore; Editing by Chizu Nomiyama, Nick Zieminski and Ted