Former Gap CEO reveals the only thing that could save Target

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The road back to glory won't be easy for incoming Target (TGT) CEO Michael Fiddelke.

If he has any shot at finally hitting some bullseyes on earnings days, then he has to restore Target's cheap chic DNA —and even that won't be a ticket to success in an economy that's favoring price leader Walmart (WMT).

"Target used to be a very, very forward thinking company. And I'm sure the new CEO is very smart. But you also got to look at product and merchandise, and that's like a restaurant serving good food. And if the food lacks key ingredients, you know, that's not good food in a sense. But it's the same with merchandise. It's got to taste good. It's got to look good and it's got to have newness. That's the oxygen of any business," said former Gap and J.Crew CEO Mickey Drexler on Yahoo Finance's Opening Bid (video above).

Drexler sat on the board of Apple (AAPL) for 16 years (alongside Steve Jobs). Today, he's the chairman of apparel company Alex Mill.

As for Target, it has consistently delivered on one thing in 2025: serving up brutal warnings about its business on earnings days.

The discount retailer cut its full-year profit guidance on Nov. 19 and warned of a tepid holiday season as strapped consumers battle through an affordability crisis for food, healthcare, and housing.

The cautious spending wasn't hard to find in Target's results.

The number of transactions declined year over year. Sales dropped in more discretionary departments, such as beauty and home furnishings.

Target promised to ramp up capital expenditures by 25% in 2026 to improve the appearance of its stores. The company said it cut prices on 3,000 food and household essential items in November.

"We believe there is a path to win regardless of how the macro environments will continue to evolve around us," Fiddelke told Yahoo Finance on a call with reporters at the time.

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Fiddelke — a Target veteran — will succeed longtime CEO Brian Cornell officially on Feb. 1, 2026.

The market is calling Fiddelke's bluff in that the company could win in a mixed to softening US economic backdrop, one where tariffs are weighing on costs.

Target's stock is down 34% year to date. Walmart — which will see US stores chief John Furner assume the CEO position from Doug McMillon in early 2026 — has seen its stock advance 23%.

Most analysts on the Street have Neutral or Sell ratings on Target's stock.

Added Drexler, "You can't argue with Walmart's results, or even Costco's (COST)."

Each week, Yahoo Finance Executive Editor Brian Sozzi fields insight-filled conversations and chats with the biggest names in business and markets on Opening Bid Unfiltered. You can find more episodes on our video hub or watch on your preferred streaming service.

Brian Sozzi is Yahoo Finance's Executive Editor and a member of Yahoo Finance's editorial leadership team. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email [email protected].

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