Steinhafel, 52, has been the discounter's merchant prince and instrumental in its strategy to be the hippest of the nation's major discounters, synonymous with "cheap chic."
With his range of experience — Steinhafel also leads Target's distribution network, technology services and legal team, and previously had responsibility for stores and global sourcing — he has been the heir apparent to Ulrich for several seasons. Minneapolis-based Target has a history of promoting from within.
Ulrich, who turns 65 in April and established the $63 billion chain as one of the world's foremost retail brands, will remain as chairman through the end of fiscal 2008.
Steinhafel joined Target in 1979 and ascended the merchandising ranks until being named executive vice president of merchandising in 1994. He became president of Target in 1999 and a member of the board last year.
The new ceo faces major challenges. Sales gains at the 1,600-unit Target chain have been slowing as consumers get pinched by tight credit, high fuel prices and the housing slowdown. The brand's appeal on Wall Street has slipped, raising speculation that some of the Target cachet also could be fading. The stock closed Wednesday at $49.92, up 97 cents, or 2 percent, though it's down from the 52-week high of $70.75.
In addition, the number-two U.S. discounter faces tougher competition from chief rival Wal-Mart Stores Inc., which had a stronger holiday season than Target, gaining the upper hand with its industrial-strength price promotions. There has been concern that Target's fashion and private brands — Merona, Xhilaration, Mossimo and Isaac Mizrahi — are showing less flair. December same-stores sales, to be reported today, are expected to be disappointing. The company projected sales would be up or down 1 percent.
Retail experts indicated that Steinhafel will face the probability of having to dispose of Target assets, including underperforming stores, to maximize shareholder value. Target also is considering selling off its profitable credit card business, which generates $6.5 billion. The retailer recently said it is continuing to evaluate "alternative ownership structures" for the credit card portfolio, and expects the review to be done during the first calendar quarter of this year.