NEW YORK (TheStreet) -- Hey Target (TGT), 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.
The company needs to invest in the kind of in-store innovations that will improve customer service, much as it did years ago with Target.com. With the economy and retail store weakness to blame for poor sales of big-box retailers, store and inventory improvement initiatives may just be what the retailer needs.
From top to bottom, Target remains a company in need of an overhaul.
Despite the odds, the stock is attractive and inexpensively priced at $55 a share which trade at 15 times its adjusted earnings. Investor confidence will depend on Target's ability to repair the damages. With the right plan, it can return to being the stellar company that once so uniformly captured the average retail consumer's imagination.
C'mon Target, you don't have Gregg Steinhafel to kick around anymore, so what's your next move?
At the time of publication, the author held no positions in any of the stocks mentioned.
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.