Target (TGT) said CEO Gregg Steinhafel will step down from his roles as chief executive, chairman and president, effective immediately. The retailer named CFO John Mulligan interim CEO as it launches a search for a new chief executive.

The move comes after a massive data breach at Target late last year, which compromised millions of the retailer’s customer credit card information records.

“The board is confident in the future of this company and views this transition as an opportunity to drive Target`s business forward and accelerate the company`s transformation efforts,” Target’s board of directors said in a statement early Monday.

The board said the decision for Steinhafel to step down came after “extensive discussions.”

Target said director Roxanne Austin will step in as interim non-executive chair of the board until a permanent replacement for Steinhafel is appointed. During the transition process, Target said Steinhafel will continue to serve the company in an advisory capacity.

"The board is deeply grateful to Gregg for his significant contributions and outstanding service throughout his notable 35-year career with the company. We believe his passion for the team and relentless focus on the guest have established Target as a leader in the retail industry. Gregg has created a culture that fosters innovation and supports the development of new ideas," the board's statement said.

Steinhafel led Target through the fallout after the data breach which exposed as many as 70 million customer records, including customer names, card numbers, expiration dates, and CVV three-digit security codes after the Black Friday shopping holiday in the U.S.

Target was criticized for what some considered a sluggish reaction the breach. Although, the company has been ramping up its security credentials recently, announcing a partnership with MasterCard (MA) to implement chip-and-pin technology at every Target location beginning in early 2015.

Troubled Retailer or Strong Stock?

Steinhafel’s exit came as a surprise to many on Wall Street despite the retailer’s struggle to secure its data network after the breach last November.

“While there were many investors who thought there should be a management change given some of the company’s recent struggles, quite honestly, very few, actually, thought it would happen near-term,” Deutsche Bank retail analyst Paul Trussell told FOX Business on ‘Opening Bell.’

He added the uncertainty surrounding Target is heighted now that it’s moving forward without a permanent chief in charge.

“The company had the opportunity to come out, reiterate its earnings forecast for the first quarter, which is now behind us, or the full year, and they did not do so. So, part of the stock’s weakness (today) is the potential that the management team walks away from the current near-term and long-term earnings view,” Trussel said.

Chad Morganlander, portfolio manager at Stifel Nicolaus & Co., told FOX Business the stock’s valuation actually makes sense when you look two or three years down the line.

“There will be a change in management, they do have a deep bench, and you’re looking at a company that’s consistently growing still, consistently profitable and well capitalized even with the legal issues they’re having with the security breach. This balance sheet is rock solid,” he said.

The big question facing Wall Street now becomes who will take over the retailer as it ramps up data security efforts and attempts to reverse its bruised image to customers.

David Strasser, managing director of hardline sales at Janny said from a stock standpoint, there are still investors looking to park money in the retailer. He added when it comes to the next chief executive,  Target might be better off looking for  someone with a background in an industry other than retail, pointing to the CEOs of companies like Best Buy and Home Depot. 

“I look at a guy like Hubert Joly at Best Buy who had never done retail before but who got to understand that business and did a phenomenal job. Frank Blake at Home Depot has really done a phenomenal job since coming in during somewhat of a turnaround situation. Those type of guys, neither of them retailers, those were great hires for those two companies over the last decade,” he said.

Russell added to that Target might benefit from someone externally with outside knowledge of the retail landscape who brings a different perspective. But he added, if the company decides to look more internally, he wouldn’t be surprised to see former vice chariman Geral Storch, who most recently served as CEO of Toys R Us fly onto the radar.

Shares of Minneapolis-based Target fell more than 3% in recent trade.

Follow Victoria Craig on Twitter @VictoriaCraig.