- In today’s CEO Daily: Phil Wahba on the changing of the guard at Target.
- The big story: The Fed will attempt to sustain its independence at the Jackson Hole symposium today despite a second criminal referral from Trump loyalists.
- The markets: Asia is up, everyone else is down.
- Plus: All the news and watercooler chat from Fortune.
Good morning. When Brian Cornell took the reins at Target 11 years ago, the retailer was, to put it mildly, a mess. Among its many problems: Target was struggling with out-of-stocks that frustrated shoppers, employee morale was low, and there was a sense that the retailer had lost much of the “Tar-zhay” cheap-chic magic that had won it millions of loyal, fanatical shoppers for decades.
So it’s disappointing for fans to see that same shopping list of problems plaguing Target again. Sales have been in decline for three years now, and the stock has plunged 64% from its all-time high in 2022.
It didn’t have to be this way. At the start of his tenure, Cornell, who the company announced yesterday will step down as CEO on February 1, was an outsider unafraid to move fast and break things. He had been CEO of a big PepsiCo unit, Michaels Stores, and Sam’s Club before that.
As I detailed in a 2015 cover story, he quickly ended Target’s ill-advised Canada expansion to focus without distraction on a struggling U.S. business, assembled an A-team of merchants to re-energize Target’s store brands (for a while, Target was launching billion-dollar brands on a monthly basis) and changed Target’s insular culture.
And in March 2017, in perhaps his boldest move, he announced a $7 billion multi-year program to remodel its physical stores, making them more inviting but also equipping them to support e-commerce pick up and delivery at a time investing in physical stores was seen as folly given Amazon’s ascendance.
Wall Street pummeled the stock but Cornell had the last laugh. Target soared for years, building a huge digital business and taking market share from department stores. It was also well-positioned with its curbside pickup and improved grocery when the pandemic struck to be one of retail’s big winners alongside Walmart and Costco. Indeed, sales rose 20% in 2020 and the following year, revenue passed $100 billion for the first time.
By that point, Cornell had been in the post for eight years, roughly the average tenure of a Fortune 500 CEO. But rather than hand on the baton, he signed on for another three years through 2025. Unfortunately, inertia set in. Shoppers felt Target lost its edge. Millions defected. Meanwhile, Walmart swooped in to take market share with its suddenly hipper apparel and home goods offerings. (The whole contretemps around DEI was also an unforced error that hurt morale.)
Cornell had a great run overall, but like many CEOs, seems to have misjudged the moment when it’s time to move on. (And he’s not really going away—he will stay on as executive chairman indefinitely.) Though Wall Street had been hoping for an outsider to take the reins, Target’s COO Michael Fiddelke got the nod. He’ll have his work cut out for him. But perhaps the lesson here is, even successful CEOs have a shelf life.—Phil Wahba
- Contact CEO Daily via Diane Brady at diane.brady@fortune.com
