Five months after a massive data breach that damaged its standing with consumers, Target corporation announced Monday that CEO Gregg Steinhafel is resigning, effective immediately. John Mulligan, Target’s chief financial officer, will serve as interim CEO until the company settles on a replacement.
The 59 year old Steinhafel resigned from Target’s Board of Directors as well, but will remain with the company in an “advisory capacity” during the transition. His position on the board will be filled temporarily by former DirecTV executive Roxanne Austin, who was appointed as interim non-executive chair. Steinhafel, a 35 year veteran of Target, was named CEO in 2008 and Chairman of the board in 2009.
His leadership has faced a variety of challenges over the last several years, probably none more damaging than the data breach. On Dec 19th of last year, Target admitted that 40 million credit and debit card accounts had been compromised between Nov 27th and Dec 15th. That admission was followed by another on January 10th, when Target revealed that hackers were able to steal personal information from as many as 70 million customers. The breach may yet prove to be the largest ever reported, overshadowing one which took place in 2007 and affected 90 Million records at the parent company of retailer TJ Maxx.
Despite public fallout, which was at least partially responsible for sagging profits that fell 46% in the fourth quarter, some believe Steinhafel’s departure from Target is likely due to a variety of factors. Analyst Brian Yarbrough pointed out some of the other difficulties Target has faced under Steinhafel’s tenure, saying the data breach was likely only a single factor in his resignation.
“The last five quarters, the U.S. operations have struggled, as far as revenue, trying to get revenue to grow. Then you look at the Canadian operations, and that has been a pretty big disappointment. And then you throw on top of that this data breach in December and I think they made the decision that it was time to look elsewhere to try and find a new leader for the firm.”
Belus Capital Advisors CEO Brian Sozzi took the opportunity to hit out at what he calls the “slow-moving nature” of Target’s culture, saying “It would have been better to start the year with fresh eyes and a fresh approach.” Sozzi was also highly critical of Target’s Canadian launch, an initiative that has seen the retailer struggling. Calling Target’s operation in Canada a “giant failure,” Sozzi claimed that “they didn’t have the operation of the store properly thought out.”
Steinhafel’s departure is only the latest executive shakeup in the fallout from the breach. Target’s chief information officer, Beth Jacobs, resigned two months ago. Her replacement, Bob DeRodes, was named just last week. Target is also seeking replacements for its chief information security officer and a chief compliance officer.