Target moves forward after proxy

All through Target’s proxy battle that culminated last week with shareholders voting to retain existing board members, there was one constant besides the constant haranguing from activists shareholder Bill Ackman with Pershing Square Capital Management. He wanted shareholders to vote for his alternative slate of directors, but very few did and for good reason. There’s nothing wrong with Target that isn’t wrong with virtually every other retailer that fell victim to the new consumer consciousness that has American’s saving more and spending less on discretionary products. In fact, there’s more right than wrong with Target, and enough shareholders saw it that way, so there was no reason to adopt a “throw the bums out,” mentality and hand Ackman a victory.

Recall, the week prior to the meeting Target reported earnings per share of 69 cents that substantially exceeded analysts’ estimates of 59 cents, which had been increased from 52 cents a week earlier when Target released April sales, and basically told them their estimates were too low. Profits still declined 13% to $522 million on revenues that were essentially flat and same-store sales that were down 3.7%, but it was apparent the worst was behind the company. It’s worth recalling the words here of Target chairman, president and CEO Gregg Steinhafel. “We are seeing encouraging signs of stability in the operating results of both our retail and credit segments. Satisfaction among our guests continues to be among the highest in the industry with guest survey scores continuing to trend upward. Broadly speaking, economic conditions appear to be stabilizing somewhat and we believe this will prompt greater discretionary spending in the months ahead.”