Bill Ackman lines up new board against Target's current one

Posted May 12th 2009 5:15PM by Brian White
Filed under: Management, Target Corp. (TGT)

Longtime Target Corporation (NYSE: TGT) supporter and share activist Bill Ackman has finally had enough. Not content with Target's board and wishful thinking that the retailer's fortunes will turn around any time soon, Ackman wants to replace at least four board members on Target's board. Ackman says his picks have the needed expertise in retail, credit card operations and real estate.

Ackman has seen his Pershing Square Capital Management stack in Target flop around like a near-dead fish for many quarters now, while larger retailer Wal-Mart Stores, Inc. (NYSE: WMT) has seen sales increase as it took market share away thanks to the recession burrowing into consumers' lives. Add to that Target's large credit exposure and the fact that it is no longer a cash cow, and all that adds up to a frustrated Ackman.

Ackman continues to be appreciative of Target management (he's been an ardent supporter for some time), but clearly wants to make sure the retailer makes it through the current tough times as best it can. Ackman pointed out the huge stock sales by company insiders in the last five years (while there were barely any purchases), and he's dead-on. Do Target insiders have a passion -- for working Target's future or lining their own pockets? It's amazing that Target was the retail dream child throughout 2007 and even into 2008, but since then it's fallen out of favor as Americans cut back retail spending and started conserving all they could. Ackman's moves are about a year too late.

Tags: Bill Ackman, BillAckman, inthenews, Target Corp., Target management, Target stock, TargetCorp., TargetManagement, TargetStock, TGT

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Reader Comments (Page 1 of 1)

5-13-2009 @ 5:50AM

aaronep said...

Bill Ackman's business is HEDGE fund management, meaning taking high risks to obtain immediate high profits.

I have been a shareholder in the original Dayton Corporation since 1967 when there were just 15 Target stores. Today there are over 1600. The business was built brick by brick on solid footing.

The management has ALWAYS reacted to current market conditions by adjusting, but has NOT jumped to knee-jerk over-reaction which has crippled other companies.

A basic premise taught in marketing 1A is to compete with your competitors on your ground, not theirs. That is what Target has been successful in doing. Five years ago K-Mart announced that they were not going to sit back and let Walmart be the lowest price retailer. They attempted to match Walmart’s prices item by item. Not having Wal-Mart's purchasing power, and sophisticated computerized distribution system, they entered bankruptcy within 24 months.

Mr. Ackman's suggestion to sell off Target's real estate to realize immediate profits endangers Target's future profits and stability. One of the main contributors to Mervyn's bankruptcy was that they no longer had control over their real estate expenses.

Mr. Ackman may now talk a different line, but I for one judge him by his past proposals and am voting to retain the current and very qualified Board and not endanger the future of the company at the risk of possible temporary market gain.

Aaron M. Epstein, N. Hollywood, CA
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5-13-2009 @ 7:52AM

Michael T said...

Your article is seemingly biased.
We are recovering from a recession. While Walmart has had a flat to slightly positive performance, they are a destination for lower income commodity driven shoppers that migrate to a Walmart safe haven during difficult times. Target is not Walmart. Target is "trend right" and delivers a more exciting shopping experience. Upon the emergence of this recession, Target will regain record same store comps.
I VOTE FOR THE CURRENT BOARD as they have a solid track record and maintain the long term perspective.