Target chooses former PepsiCo executive Cornell as next CEO
Target Corp., struggling to fix a botched expansion in Canada and undo the lingering damage of a holiday hacker attack, hired former 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, stepped down in May and handed the reins to Chief Financial Officer John Mulligan on an interim basis.
"Brian ran PepsiCo Americas Foods, which is an excellent business," Ali Dibadj, an analyst at Sanford C. Bernstein & Co. in New York, said today in an e-mail. "It is tough to say exactly how he improved that business from the outside, but the business clearly did not falter. Perhaps his time at Sam's Club would be more indicative of his potential success at Target, and we understand the results there were mixed."
Target shares have slipped 3 percent this year, compared with a 6.6 percent gain for the Standard & Poor's 500 Index and a 5 percent decline for Wal-Mart.
Too Cautious
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, Mulligan said in an interview that month.
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.
Falling Profit
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.