STEINHAFEL SEEN NEXT IN LINE TO BE TARGET CEO

MINNEAPOLIS -- Gregg W. Steinhafel, president of Target Stores here, appears to be the logical choice to become the next chief executive officer of Target Corp. following the departure earlier this month of Gerald Storch, the parent company's vice chairman, a pair of industry analysts said last week.

Steinhafel's background is in merchandising -- as is that of Robert Ulrich, chairman and CEO of Target Corp. -- while Storch has more of a financial background, they noted.

Target said Storch "stepped down" after 12 years with the company, though it did not give a reason.

"It became clear of late that Storch was in a horse-race with Steinhafel to be Target's next CEO," said Robert F. Buchanan, an analyst with A.G. Edwards & Sons, St. Louis. "Storch's departure [is] a clear indication Steinhafel will be named Target's CEO whenever Ulrich decides to retire."

At Target, Storch was responsible for oversight of financial services, information technology, distribution, target.com and strategic planning. Buchanan said Storch "did a fine job overhauling Target's supply chain, such that for the first time ever in recent years the company achieved good in-stock positions across the selling floor."

Christine K. Augustine, an analyst with Bear Stearns, New York, said Storch's departure surprised her. She said she believes he decided to leave "on his own accord and was not forced out. Given the upcoming holiday season, the timing is too odd for Target to have let go of such a senior executive."

She said Storch's departure "paves the way" for Steinhafel to succeed Ulrich.

Augustine said Storch may have left Target to seek another opportunity. "At 48 years old, [he] is too young to retire and may turn up as CEO or head of a major division at a retailer or a consumer products company."

The divisions that reported to Storch will report to Ulrich on an interim basis, she noted, "[and] we expect the management structure to be realigned to fill the vice chairman vacancy, although Target may decide to search for a replacement in certain areas," she said.

Augustine said she does not believe Storch's departure signals any change in Target's strategic direction.

Steinhafel, 50, has been president of Target Stores since 1999 after five years as executive vice president of the division.

Ulrich, 61, has been chairman and CEO of Target Corp. since 1994. He joined the company in 1967 as a merchandise trainee.