Target Chooses Former Pepsi Executive Cornell as Next CEOCotten Timberlake
Target Corp., struggling to fix a botched expansion in Canada and undo the lingering damage of a holiday hacker attack, hired PepsiCo Inc. executive Brian Cornell as chief executive officer.
Cornell, 55, also will become chairman, the Minneapolis-based company said today in a statement. The executive most recently led PepsiCo’s Americas Foods unit and previously had been CEO of Wal-Mart Stores Inc.’s Sam’s Club and craft-goods seller Michaels Stores Inc.
Cornell, the first Target CEO chosen from outside the company, takes over a retailer struggling to right itself after a data breach in the holiday shopping season hurt its standing with customers while a bungled expansion in Canada has led to falling profit. Gregg Steinhafel, who had been Target’s CEO for about six years and worked there for 35 years, resigned in May.
“There is clearly an advantage in bringing in an outsider for the organization to bring some fresher perspective to Target,” Arun Daniel, a senior fund manager at J O Hambro Capital Management in Boston, said in a phone interview. “There is no overnight fix for Target.”
Target shares fell 1.6 percent to $60.38 at 9:34 a.m. in New York. The stock had slipped 3 percent this year through yesterday, compared with a 6.6 percent gain for the Standard & Poor’s 500 Index and a 5 percent decline for Wal-Mart.
Even before the data breach, which exposed the personal information of tens of millions of customers, Target had lost its way by becoming too cautious and bureaucratic, Interim CEO John Mulligan, also the company’s chief financial officer, said in an interview in May.
Since Mulligan took over, he hired a top data-security executive, replaced the retailer’s Canadian chief and moved the company’s entire leadership team to the 26th floor of its headquarters to allow faster decisions and more clarity.
Target also started scaling back on its four governance meetings, which have focused on the supply chain, marketing, design and capital expenditures.
Steinhafel held himself personally responsible for the security attack. About 40 million credit- and debit-card numbers, along with 70 million addresses, phone numbers and other pieces of information, were captured by the malware attack on the company’s 1,797-store network during November and December.
Recovery efforts generated $26 million in expenses during the first quarter, with $8 million of those costs getting covered by insurance. Standard & Poor’s cut Target’s debt rating in March, citing the data breach and losses at the Canadian unit.
Target’s profit has fallen for six straight quarters, also hurt by weaker demand from American consumers who have remained cautious about spending during the economy’s shaky recovery.
Cornell took over as chief executive of PepsiCo Americas Foods in March 2012, running the company’s largest division with $25 billion in revenue from selling brands including Frito-Lay and Quaker, according to PepsiCo.’s website.
“He has a lot of good experience at other large retailers as well as consumer products,” Brian Yarbrough, an analyst with Edward Jones & Co. in St. Louis who recommends buying Target shares, said in an e-mail. “He understands the value of brands and how to communicate the brand to consumers. The one weak link could be the lack of omni-channel retail experience but he can always bring in strong people beneath him to fill that role.”