* Target appoints Pepsi executive Brian Cornell as CEO
(Adds analysts' comments, updates shares)
By Siddharth Cavale
July 31 Beleaguered retailer Target Corp
named former PepsiCo and Wal-Mart executive Brian Cornell as CEO
and chairman as it tries to regain customer confidence following
a devastating data breach last year that hit earnings.
Cornell, the first outsider to lead Target, has his work cut
out. The company's comparable store sales have declined in three
of the last five quarters, while store visits have fallen for
six straight quarters.
An ambitious expansion into Canada last year has stumbled.
The company opened a record 124 stores, but couldn't keep
shelves full due to delivery bottlenecks and customers
complained of steep prices.
The No.3 U.S. retailer has also been late to embrace
e-commerce, lagging Wal-Mart Stores Inc and Amazon.com
From 2009 to 2012, Cornell led a turn-around at Sam's Club,
Wal-Mart's slowest growing business at the time.
In May 2012, he joined PepsiCo Inc to head the
company's largest business, Americas Foods unit, which makes
Frito Lay chips and Quaker oats.
"He did a very solid job at Sam's," Cowen & Co analyst Faye
Landes said, citing that same-store sales growth at the
membership-only stores jumped to 5.1 percent from 1.4 percent
during Cornell's tenure.
The 55-year-old, who takes the top post at Target on Aug.
12, had been a contender to succeed PepsiCo CEO Indra Nooyi,
according to the Wall Street Journal, which reported Cornell's
appointment earlier on Thursday. (on.wsj.com/1xCMUqk)
Before joining Sam's Club, Cornell held the top job at arts
and crafts chain Michael's Stores Inc for two years.
"... His experience at large retail and consumer product
goods organizations should be instrumental in guiding Target,"
Morgan Stanley analyst Simeon Gutman wrote in a note.
Under previous CEO Gregg Steinhafel, Target focused on
low-margin grocery items to entice frugal customers, turning
away from its popular home and apparel products, which gave the
company its cheap chic appeal.
"I think the bottom line now is to renew merchandise with
fresh styles," Edward Jones analyst Brian Yarbrough said.
Refocusing on home and apparel will expand margins and widen
its customer base, helping Target avoid a price war with
Wal-Mart, Yarbrough said.
Wal-Mart gets about 60 percent of its total U.S. revenue
from selling groceries.
Steinhafel was removed in May, after Target lost nearly $1
billion in Canada in 2013 and the data breach in the key holiday
season led to the theft of at least 40 million payment card
numbers and 70 million other data.
CFO John Mulligan has led Target in the interim and will now
return full-time to his CFO duties after Cornell's appointment.
The company's shares were down 2 percent at $60.20 in
The stock fell 11 percent in the weeks following the breach,
but has made up for most of those losses since then to close at
$61.38 on the New York Stock Exchange on Wednesday.
(Writing by Joyjeet Das; Additional reporting by Supriya Kurane
and Arnab Sen in Bangalore; Editing by Gopakumar Warrier and