Target has found it difficult to compete with Walmart as consumers with rising living expenses continue to look for deals.
After the Financial Times revealed that hedge fund Toms Capital Investment Management had made a “significant investment” in the big-box retailer, whose sales and share price this year have trailed behind some of its more value-oriented competitors, Target Corp. shares were up on Friday.
The stock of Target (TGT) increased 1.8% on Friday.
Target was under pressure from the fund, which had made a “significant investment” in the business, according to the Financial Times, which cited people with knowledge of the situation.
It was initially unclear what the claimed investment’s specifics were, including its quantity, timing, and motivation. A request for comment from Toms was not immediately answered.
When contacted, a Target representative stated: “We maintain a regular conversation with the investment community as part of our strong shareholder engagement program.
“Target’s top priority is getting back to growth, and our strategy to do so is rooted in three strategic priorities: leading with merchandising authority, providing a consistently elevated shopping experience and leveraging technology,” the statement read.
The research was released following Target’s stock decline of over 27% so far this year. Target has found it difficult to compete with Walmart Inc. on price, according to experts, and it supplies less of the basic necessities that consumers have prioritized over the past few years as they continue to look for deals due to rising living expenses.
In recent quarters, Target’s same-store sales growth has been erratic. The business announced in August that Michael Fiddelke would take over as CEO on February 1. However, several analysts hoped expecting more drastic adjustments.
In an effort to boost sales, Target announced last month that it will concentrate on regaining its sense of style. Additionally, it stated that it would rely on artificial intelligence and larger stores. In an effort to turn things around, the company intends to spend about $5 billion in the upcoming year, which is about $1 billion more than it has spent so far.
Walmart Inc.’s (WMT) stock has increased by 23.6% so far this year, while the stock of Amazon.com Inc. (AMZN) has increased by about 6% and the stock of Costco Wholesale Corp. (COST) has decreased by 4.7%.
