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Conclusion: Any way you slice it, this puts Target in the penalty box.

This definitely puts TGT in the penalty box for us – for so many reasons…

  1. This was sudden. He’s been on the conference/double secret 1-on1 circuit over the past quarter. To do so knowing he was on his way out would have been uncharacteristically and unacceptably misleading.
  2. Scovanner was clearly the faceplate of the company to Wall Street, and has been for the better part of 10-years. There’s no clear successor yet.
  3. With Francis (25-year veteran) leaving to JCP last quarter, we’re now looking at two of the most seasoned executives at the company stepping down over 90 days.
  4. Both of these gentlemen collectively were charged with fixing EVERY major intermediate-term issue plaguing this company.
  5. Does anyone really think that they won’t sweep every little item under the carpet and shore up every accrual and blame it on him/them? Better yet, that’s so tough to do quickly on such a big balance sheet. This could take a few quarters.
  6. Even if the company puts up good numbers over the short term (as they’ve been doing), there’s big enough uncertainty that people will not give TGT the benefit of the doubt.
  7. This is precisely the wrong time of year for this to happen to TGT. Conversely, it’s great for Wal-Mart, and perhaps even KSS.