Target Names New CEO in Bid to Lure Back Customers

Target CEO
Matt Rourke/AP
By Siddharth Cavale

Beleaguered retailer Target (TGT) named former PepsiCo and Walmart 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 Walmart Stores (WMT) and (AMZN).

From 2009 to 2012, Cornell led a turn-around at Sam's Club, Walmart's slowest growing business at the time.

In May 2012, he joined PepsiCo (PEP) 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 Thursday.

Before joining Sam's Club, Cornell held the top job at arts and crafts chain Michael's Stores for two years.

%VIRTUAL-pullquote-His experience at large retail and consumer product goods organizations should be instrumental in guiding Target.%"His experience at large retail and consumer product goods organizations should be instrumental in guiding Target," Morgan Stanley (MS) 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 Walmart, Yarbrough said.

Walmart 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 afternoon trading.

The stock fell 11 percent in the weeks following the breach, but has made up for most of those losses since then to close Wednesday at $61.38 on the New York Stock Exchange.

-Additional reporting by Supriya Kurane and Arnab Sen in Bangalore.

8 Retro Ways to Save Money
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Target Names New CEO in Bid to Lure Back Customers

Remember what your parents told you to do when you were bored? That's right: Go outside and play. Not only is this an important lesson for kids –- finding ways to have fun using only your imagination –- it's free. It's easy today to get caught in the trap of spending money to entertain our families, whether it's buying an smartphone app, spending money at the mall or the movies or buying new toys. These are fun treats every once in a while, but keep it to a minimum and remind your family of the great outdoors.

Libraries are fighting to stay relevant in today's technology-centric society, so why not help them out while you save money on books and entertainment? Library cards are still free, and your taxes pay for these resources. Borrow books as well as DVDs of movies and television shows and cut back on your digital purchases and on-demand subscriptions.

Before you protest, this is definitely a major lifestyle change if you already use a smartphone regularly, but worth considering if you want to save a lot of money each month. Opting for a phone without Internet access –- or even a pay-as-you-go phone, if you rarely need to use it –- will cut costs; it might offer the added benefit of unplugging from constant connectivity.

Carpooling became popular during a countrywide effort to save gas in the 1970s, and today there are signs of resurgence with technology that allows commuters in the same area to easily find each other. If you don't have the option of public transportation, search in your own community for carpooling groups or talk to your coworkers to figure out a schedule.

Commit to skip the expensive salad bar or lunch spot across the street and pack a bag lunch at least three or four days a week. This can add up to a lot of money saved over time. 

While you don't need to use a pencil and paper to write down every purchase as was done years ago, the routine of tracking everything you buy can be an important habit for more careful spending. If you'd prefer to stay digital with this tactic, use Excel, Google (GOOG) Docs or an online tool that collects your daily transactions and sorts them for you.

This concept is no stranger to those who lived during economically challenging times years ago; if you didn't make enough money, you simply found another job to boost your income. Today, while job availability, familial roles and time commitments differ greatly from back then, you can still look for additional income opportunities. Freelancing is one option for those that need to spend time at home with family; you can also find seasonal opportunities in retail.

Take a tip from earlier generations and make your contributions to savings accounts the same, rather than adding more or less depending on other unexpected expenses. This might mean rethinking the amount you put away each month; even if you lower it, more regularity over time can have a bigger impact.
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