Target President and CEO Gregg Steinhafel resigned Monday as the retailer continues to recover its image nearly five months after a massive holiday-season data breach.
Steinhafel also resigned as chairman of the board of directors. John Mulligan, Target's chief financial officer, will serve as interim president and CEO, while current board member Roxanne Austin will take over as interim chair.
"Today we are announcing that, after extensive discussions, the board and Gregg Steinhafel have decided that now is the right time for new leadership at Target," a company statement posted on its website Monday morning says.
Steinhafel, a 35-year veteran of Target, will serve as an advisor during the transition. In an SEC filing Monday, Target said Steinhafel is entitled to severance pay but that the board "has not made a final determination on other compensation-related aspects" of Steinhafel's departure.
In a letter to the board of directors, posted to Target's website Monday, Steinhafel said, "The last several months have tested Target in unprecedented ways. From the beginning, I have been committed to ensuring Target emerges from the data breach a better company, more focused on delivering for our guests."
Target hired executive recruitment firm Korn Ferry to assist in finding its next CEO.
Some say Steinhafel's resignation should have come sooner.
"It would have been better to start the year with fresh eyes and a fresh approach," says Brian Sozzi, CEO of Belus Capital Advisors. "I think this reflects the very slow-moving nature that is inherent of Target's culture."
Target should now take the opportunity to look for a leader outside the company and one with international business experience who could help salvage the retailer's unsuccessful launch in Canada, Sozzi says. Target opened 124 stores across Canada last year and announced in January that it plans to open nine more in 2014.
Sozzi characterizes Target's Canadian expansion as a "giant failure," adding that the company opened too many stores at once and has failed to connect with Canadian shoppers who still see more value going to Walmart and Costco.
"They didn't have the operation of the store properly thought out," he says. "We've seen consistent merchandise out of stock. Prices are too high."
In Target's most recent quarterly earnings announcement in February, the company reported that its Canadian operations contributed to a $1.13 earnings-per-share decline on its full-year earnings and a 40 cent earnings-per-share decline on the fourth quarter.
Steinhafel stepping down follows other executive leadership changes. Target appointed a new chief information officer last week. Bob DeRodes takes over the position today after former CIO Beth Jacob resigned in March.
Target said in December that hackers stole credit and debit card information from 40 million customers. In January it revealed that personal information like email addresses and phone numbers may have been stolen from up to an additional 70 million customers.
In the months since, Target adopted a faster timeline for switching to more secure chip-based credit and debit cards, and the payment terminals that accept them. As part of the $100 million effort, Target announced last week that it all of its store-branded cards would be reissued as MasterCard chip-and-pin cards in 2015.
Target shares were down $1.70, or 2.79%, to $60.29 shortly after 10 a.m.