Activist investor Toms Capital Investment Management (TCIM) has made a significant investment in Target, the Financial Times reported on Friday, intensifying pressure on the struggling retailer after years of lagging performance compared with its rivals.

The size of the stake was not disclosed, and the report did not specify what demands the New York-based firm may bring forward.

Target's shares rose 2.6% on the news. Its stock has lost more than 28% of its value this year after the Minneapolis-based chain posted three straight quarters of falling comparable sales. In August, the retailer appointed veteran company executive Michael Fiddelke to revive growth, as the business faces pressure from strained household budgets and tariff uncertainties.

"We maintain a regular dialogue with the investment community. Target's top priority is getting back to growth," Target said in a statement to Reuters on Friday.

Hedge fund TCIM is a relatively unknown entity in the retail industry but recently gained attention after taking a stake in Tylenol maker Kenvue before its sale to Kimberly-Clark last month for $40 billion. It has also pushed for changes at Pringles maker Kellanova and US Steel.

For Fiddelke, the activist stake represents his first major test ahead of assuming the CEO role in February. His appointment has already sparked investor concerns, as he will continue reporting to current CEO Brian Cornell, who is set to become executive chairman of the board.

That structure has drawn criticism, with the nonprofit shareholder activist group The Accountability Board tabling a shareholder proposal in October urging Target to appoint an independent chairman.

"To us, this (TCIM stake) signals that investors are hungry for change, and means our shareholder proposal likely has an even stronger chance of passing," said Matt Prescott, President of the Accountability Board, which owns Target shares.

To help assuage investor concerns and reinvigorate its business, Target laid out plans to spend an additional $1 billion in 2026 on new store openings and remodels. The company, which operates nearly 2,000 stores, also cut 1,800 corporate roles as part of a broader restructuring.

The move by TCIM won't be Target's first encounter with an activist investor. In 2009, the company fought a high-profile proxy battle with Pershing Square's Bill Ackman, who sought board seats to push through a real-estate spin-off amid declining profits.