Trouble at Target: 3 questions for CEO Gregg Steinhafel

FORTUNE — Let’s cut right to the chase. For a whole host of reasons, (not least of which is the continuing fallout from the credit card data breach disaster) I think Target’s stock will continue to face significant headwinds. And if I were able to sit down, face-to-face, with CEO Gregg Steinhafel for five minutes, I would want answers to three key critical uncertainties that exist in the minds of investors right now.

Here are the three questions I’d ask:

Who exactly are you guiding?

In other words, who are you addressing with your company guidance—Wall Street or Main Street? In the two decades I’ve been doing this, I’ve never once had to ask this question before to a CEO. But the reality is that you’re saying that you are going to generate positive same-store sales this year and gross margins will be up in the US and in Canada. And all of this will happen while you are lowering prices to win back customers who left after the data breach? Good luck. It all seems like a Mission Impossible combination.

That leads us back to the original question – are you giving guidance to Wall Street or consumers?

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What’s going on right now with Target reminds me of what cruise companies do during their peak booking season – they generally issue positive comments because they’re talking to travel agents, not to Wall Street. If they say that bookings are weak, then agents will discount price more heavily. So, is Target sending out this perplexing message to keep consumer opinion high, even if it means opening up the possibility of lowering Wall Street expectations later in the year?

What about share losses?

Who do you think is gaining the most business from customers who headed for the exits following the data breach debacle? For argument’s sake, let’s assume that it’s Wal-Mart. Do you think that WMT is prepared to let that business to come-and-go so easily? Will you match Wal-Mart (WMT) if it comes down to price?

In reality, the shoppers that left Target (TGT) did not leave because of price. They left because of trust. You might be able to buy back trust, but you’ll have to undercut Wal-Mart on price rather significantly.

If that’s true, please refer to question #1.

What does Target want to be when it grows up?

That may sound like a ridiculous question at face value. But the reality is that it used to be “Wal-Mart vs. Target” – in share of market, share of mind, and share of investment dollars. But as bad as Wal-Mart’s rap sometimes can be, the fact remains that it has over 10,000 stores under 71 banners in 27 countries. It has several formats – from Supercenters, to warehouse clubs, to neighborhood markets, and it is even beta-testing C-stores/gas stations. At least it’s trying to evolve.

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Meanwhile, Target just has one primary format in North America, with a token operation in India.

The point here is that as far as perception is concerned, Target used to be right there with WMT – but now it seems to be somewhere between WMT and Kohl’s. When you look out five to 10 years, what will Target look like?

Bonus Question (if he hung around an extra 2 minutes). Do you think you fired your customers?

JC Penney (JCP) fired its customer. Former CEO Ron Johnson said at the time that he did not. Lululemon Athletica (LULU) fired its customer. CEO Chip Wilson said at the time that he did not. The reality is that both of those retailers fired their customers. It will likely take them 2 to 3 years to get an acceptable portion of their customers back.

So, do you think that you fired your customer? Your current lofty guidance suggests that the answer is No.

(Note: I’d give Target’s CEO all the credit in the world if he said Yes. Why? Because it would suggest that he’s actually doing something about it).

Brian McGough is managing director and retail sector head at Hedgeye Risk Management. You can follow him on Twitter at @HedgeyeRetail