Target Appoints Former Sam's Club and PepsiCo Executive as CEO
MINNEAPOLIS, MN - Three months after parting ways with former CEO Gregg Steinhafel, Target has announced the hiring of former Sam's Club and current PepsiCo executive Brian Cornell to lead the company going forward. Cornell's hiring is significant because he is the first outsider brought in to lead the retailing giant in Target's history. While this might seem like a radical move to some, Greg Melich, Head of Consumer Research at ISI Group said that this is exactly what Target needed most.
"Outside perspective is what Target needs, in our view, given the need to rebuild trust," he said.
Janney Capital Markets' Managing Director David Strasser revealed a similar opinion in an article by Barron's.
“We applaud this move,” he told Barron's. “Although Mr. Cornell was not at Wal-Mart for a long time, during that period, we did get to know him, and were impressed with where he was taking the division at the time...We believe bringing an outsider into the company with product and retail experience provides the right mix and background for Target.”
When he assumes his new position on August 12th, Cornell will certainly not face any shortage of tasks to accomplish. As ABC News reported, Target has suffered in recent fiscal quarters, first with the data breach and then with disappointing numbers from its Canadian expansion in which over-aggressiveness lost Target nearly $1 billion. Together with increasing pressure from competitors like Wal-Mart, this has led to Target's first annual profit decline in the last half decade, a trend which Cornell will be looking to reverse over the course of the next fiscal year.
While many have applauded Target's choice in Cornell, some investors are concerned that his lack of experience could make his transition to Target a difficult one.
Cowen and Company's Director Faye Landes and Research Associate Krista Zuber for example told Barron's “Cornell has no turnaround experience that we know of and has limited experience in the areas that Target explicitly stated in its 1Q14 call that the new CEO would focus on – Canadian retail and digital.”
As of 10:52am Thursday morning Target shares dipped 1.6% as Target investors reacted to this news.
Cornell however remains steadfast in his belief that he is the right man for the job of leading Target back to the profits and growth it has historically enjoyed.
"I'm already shopping for a new warm coat for next winter," he quipped to ABC.
Stay tuned to ANUK for any further updates on Target's plans going forward.