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Target Doesn't Have Gregg Steinhafel to Kick Around Anymore

NEW YORK (TheStreet) --  Hey Target (TGT - Get Report), it's time to face the music: You're operating without a CEO, you lack an organizational plan, your brand is teetering and well, there's that matter of Canada to sort out.

No wonder that shares have fallen 12% this years compared to the S&P 500 Index SPX which has gained 3.4% in 2014.

Bob Summers at Susquehanna International spoke for much of the investment community when he wrote this week that former CEO Gregg Steinhafel's severance pay-out couldn't have come at a worse time for the company's already weakened popularity. 

"We remain concerned the departure of Gregg Steinhafel may foreshadow greater than expected difficulties in both markets," Summers said in a note. "While the appointment of a new CEO and a resetting of expectations could prove a positive catalyst, the stock will likely confront further near-term challenges."

Yet as bad as it looks, and it has looked very bad, the Minneapolis-based retailer remains a formidable enterprise, and certainly can regain its place among the pantheon of great companies provided it acts quickly and intelligently. But genuine improvement will take time.

The hacking of some 40 million credit card numbers which cost the company at least $35 million in direct expenses generated a lot of maelstrom of bad publicity. As for the poorly executed Canadian expansion, Target has more work to do. Last year, Canadian sales generated $1.3 billion while company lost a whopping $941 million. Mistakes were plentiful and painful. Target's presence in Canada is hardly assured.

Not too long ago, I visited a Target store which indeed had flaws. The floor looked abandoned with customer service reps and the merchandise areas lacked a visual appeal.

As part of its campaign to win back the hearts and wallets of its customers, Target over the Memorial Day weekend offered 20% to 30% discounts on outdoor items such as gardening gear and patio furniture. The company has promised a $100 million overhaul of its proprietary REDcards with chip-enabled smart-card technology, scheduled for delivery by the first quarter of 2015.

Despite data breach naysayers, this overhaul is comforting. As a REDcard holder myself, Target displays good intention to win back consumer trust, even if next year is still far away.

The roadmap is clear: Continuing to fix the data breach mistakes, cleaning up its U.S. retail stores, introducing its "newness factor" through mobile, and developing partnerships such as with Altuzarra are good places to start. It also needs to empower its new leadership team to revamp its Canadian operations, and quickly and drive more traffic to both its online and retail stores.

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