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Wesfarmers' department stores division head stepping down

Wesfarmers Ltd. said Aug. 15 that Guy Russo will retire as CEO of its department stores division, which includes the Target and Kmart chains in Australia, and also from his role as as managing director of Target.

Ian Bailey will replace Russo as head of the Australian conglomerate's department stores division, effective Nov. 1. He currently serves as managing director of Kmart and will continue to hold that role in addition to his new responsibilities.

Marina Joanou, CFO of Wesfarmers' department stores division, was promoted to managing director of Target, effective immediately.

After Nov. 1, Russo will serve as an adviser to Wesfarmers and the department stores division through the end of fiscal 2019.

The leadership reshuffle comes after Wesfarmers unveiled a plan in June to scale back Target by closing 20% of underperforming outlets over the next five years, while also revamping the department store chain to become more fashion-focused.

Russo disclosed at the time that as many as half of Target's 305 locations in Australia remained unprofitable, and that he had told managers to improve sales in an effort to save their locations.

During an Aug. 15 conference call to discuss Wesfarmers' full-year fiscal 2018 earnings, Russo updated analysts on Target's recent performance. "We saw sales growth in women's, menswear, home, toys and in our online business," the executive said. "While the reset of Target and its cost base has improved significantly, the business is now turning itself and its focus to sales."

For the financial year ended June 30, Target recorded a non-cash impairment of around A$300 million and saw total sales growth decrease 4.7%.

"We still have improvements required in two areas of our business, and that is in the general merchandise and the beauty department," Russo said during the call. The executive expects Target's future earnings growth to be driven by "increased levels of direct sourcing, lower levels of markdown, improved shrinkage and the benefits of lower inventory and the continued reductions of supply chain and store operating costs."

Wesfarmers' Target and Kmart chains have no corporate connection to U.S. retailers Target Corp. or Sears Holdings Corp.