Moody's Sees Target (TGT) CEO Departure as Credit-Negative Event
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In a release published earlier today, and available on Moodys.com. Moody's Investors Service stated that the sudden departure of Target Corporation (NYSE: TGT) Chairman, Chief Executive Officer, and President Gregg Steinhafel was a credit negative, though no action will be taken on the A2/Prime-1 ratings or the stable outlook at this time. "We believe this to be a very inopportune time for a change at the top of Target given the challenges the company is facing on multiple fronts, namely the credit card breach and its potential fallout, a sluggish start to its Canadian expansion, and a difficult operating environment in its core US market," stated Moody's Vice President Charlie O'Shea. "While we are taking no rating action at this time, in the event the search for a replacement is protracted, or if during this process there are indications of any changes in strategy or financial policy, or if operating performance deteriorates, negative rating pressure would occur, with an outlook change to negative a likely outcome. Further, if as a result of the search process or the ultimate hiring decision key incumbent executives part ways with the company, negative pressure could result as well. We also note that while the lack of seamless transition to a permanent replacement is not optimal from a corporate governance perspective, we recognize the search for both internal and external candidates is an indication that Target's board is endeavoring to ensure that the best candidate for the position is identified and hired."
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