1 Green Flag for Target Stock Right Now

Key Points

• Target has posted several quarters of same-store-sales declines since 2023.

• The company's been willing and able to evolve in an effort to turn its business around.

• This stock's multiyear sell-off may now be an opportunity for risk-tolerant investors.

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With just a passing glance at its recent results, it would be easy to presume the worst of retailer Target (NYSE: TGT). Same-store sales fell 3.8% year over year during the first quarter of this year, extending a string of lackluster numbers going all the way back to 2023. That's when rampant inflation forced consumers to dial back their discretionary spending. Target shares are now down more than 60% from their late-2021 peak as a result, and knocking on the door of new multi-year lows.

Forward-thinking investors may want to use this weakness as a buying opportunity though. Whether or not it seems like better days are on the horizon, the company clearly knows it needs to do something differently -- and soon.

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At least trying to fix what's broken

Chief among the clues that the winds of change are blowing is the creation of a new department. In May, Target established an Enterprise Acceleration Office. Headed by Chief Operating Officer Michael Fiddelke, this office will (among other things) "advance key priorities, ranging from simplifying cross-company processes to using technology and data in new ways to power the team."

Were it just this change it might be a dismissible announcement. It's not just this development though. Chief Financial Officer Jim Lee now leads Target's enterprise strategy and partnerships. Chief Commercial Officer Rick Gomez is now overseeing Target's enterprise insights team.

Most of these are relatively new constructs meant to support the strategic plans unveiled in March to add $15 billion in annual sales by 2030. The retailer's private label business and partnerships with third-party brands feature prominently in these plans.

For perspective, Target did $106 billion in business last year.

Expect it when you least expect it

There's no evidence that these initiatives are helping yet, but, it's also too soon to pass judgment on their efficacy. Either way, for risk-tolerant investors, all of these initiatives and management shakeups at least set the stage for improvement at a time when the domestic economy is doing pretty well, supportive of more discretionary spending.

James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Target. The Motley Fool has a disclosure policy.