To unpack the 40-year-plus leadership journey of Target (TGT) chairman and CEO Brian Cornell, you have to head to the fenced-off basketball courts in the Whitestone neighborhood of Queens, N.Y.
The area wasn't always a magnet for upper-middle-income families, and Cornell wasn't always decked out in a fitted white button-down, dark slim-cut jeans, and black leather loafers.
"I grew up largely without a dad," Cornell, 65, told me in a new episode of Yahoo Finance's Lead This Way. "I had the support of my mom and tremendous support from my grandparents, who actually lived in this neighborhood. It certainly wasn't a classic lifestyle where we say, 'All right, here's a kid who's going to grow up to be successful.' Certainly not run a company like Target. But I learned early on in life the importance of school and performing well in the classroom."
Back then, he was just a sports-loving kid who shoveled snow, mowed lawns, and washed trucks to buy sporting equipment — a world away from high-profile jobs at PepsiCo (PEP), Walmart (WMT) owned Sam's Club, Michael's, and Safeway.
"I think if you grow up the way I did, you always feel like the underdog. You always worry about taking that step back," added Cornell. "So I think it has always given me a bit of a competitive edge, and you kind of lean in and make sure that nobody's going to ever outwork you and you're going to give it your all and try to perform every day."
Target chairman and CEO Brian Cornell (left) returns to his hometown basketball courts in Queens, N.Y., for the first time in decades to share with Yahoo Finance executive editor Brian Sozzi (right) how he rose the leadership ranks. ·Brian Sozzi
Cornell has taken that mentality and transformed Target into a modern-day big box chain, which features stationery and groceries alongside limited-edition Stanley tumblers and hand lotion from Dwayne "The Rock" Johnson.
It hasn't been an easy decade for Cornell, who likes to quote teachings by famed UCLA basketball coach John Wooden. But the chief executive is used to breaking through roadblocks, whether it be scrimping each week in Queens or leading an iconic retailer from a home base in Minneapolis.
Cornell's major CEO moments
A CEO's tenure is often defined by a few key moments. The right decisions tend to lead to impressive sales, profit gains, and, if the company is public, a higher stock price. The wrong moves will likely ensure a brief stay in the corner office.
Cornell has stood at many crossroads at Target — including on his first official day on Aug. 12, 2014.
As the first outsider to lead Target as CEO, Cornell came into a retailer often missing the mark. The company had been taking on heat from a data breach that impacted an estimated 40 million debit and credit cards. And prior management's dreadful foray into Canada was hemorrhaging money.
Between Jan. 1, 2014 and July 30, Target's stock fell 3.4% compared to a 6.6% gain on the S&P 500 (^GSPC), per Yahoo Finance data.
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Target went on to post a meager 1.3% same-store sales gain for 2014 and a 2.7% drop in adjusted earnings per share, its second straight year of declines.
It was time to act fast.
In early January 2015, Cornell announced the closure of 133 stores in Canada, less than two years after it opened its first location in the country. The company incurred a $5.4 billion quarterly loss and laid off 17,000 workers.
"I was new to the company, new to the board, and I never expected that I'd be talking about closing down that operation. I thought it'll be just something that I focus in on for a couple years. We turn that around, we'd get Target back on track in Canada," Cornell recalled.
But he doesn't regret making the tough call.
By June 2015, Cornell was back with a $1.9 billion deal to sell Target's 1,600-store-plus pharmacy business to CVS Health (CVS). Cornell reasoned CVS could operate the pharmacies better and that the chain would also benefit from CVS's brand recognition.
Today, all pharmacies in Target stores are run by CVS.
Over the next two years, Cornell and his team worked to reestablish Target's private-label goods, improve online operations, and expand its grocery offerings.
But Cornell knew he had to swing bigger to redefine Target, even if it meant unsettling Wall Street and putting his job on the line.
The date was Feb. 28, 2017. Target had rented out a sleek banquet hall in New York City and invited the Wall Street community to attend. Cornell was set to finally reveal his vision for the Target of the future.
To say the tension in the room was palpable (I was in attendance) would be an understatement. Target, like many others in retail, was closing the books on a tough holiday shopping season. Its fourth quarter same-store sales fell 1.5%, store traffic rose a slim 0.2%, and earnings came in at the low end of guidance.
Those numbers hit the newswires early on the morning of the 28th. The stock had already dropped 29% during the previous 12 months.
Cornell had been CEO for three years, and the heat was on to deliver a sustainable turnaround. Every analyst in the room knew it.
In his trademark black suit, Cornell delivered his startling long play: Target would spend $7 billion over the next three years to master digital shopping and woo picky millennials with growing families.
The plan was ambitious: It included more than 1,000 store remodels by the end of 2020; the opening of 30 small stores a year in urban areas dominated by CVS and Walgreens (WBA); the retraining of employees; a new staffing model for shipping online orders from the stores; an overhauled website, mobile app, and rewards program; and lower prices on groceries and consumables.
"That's the day I will remember forever. And I remember that day like it was just yesterday," Cornell said.
Brian Cornell quote
The $7 billion price tag was a tough sell. I was there, canvassing the room, when Cornell revealed the number. Analysts looked at each other with stunned faces. Shock swept the room.
That enormous investment meant depressed profits and cash flow in the near future. Sales would suffer as construction crews renovated stores. There was little belief that Target would earn a solid return by investing in drastic changes, especially with a rejuvenated Walmart and a growing nation of dollar stores.
Target’s stock closed the Feb. 28, 2017, session down about 12%. Wall Street’s verdict on Cornell’s plan was two thumbs down.
In one final sign he wasn’t playing around, Cornell purchased same-day delivery service Shipt for $550 million on Dec. 13, 2017. Many in retail had never heard of Shipt at the time. The price seemed astronomical. So ended a year of question marks for Target and the kid from Queens.
The Target of today
The Target of 2024 is now the byproduct of those tough decisions.
The company is on pace to notch close to $106 billion in sales this year, compared to $73 billion in 2014. Earnings per share will likely more than double compared to a decade ago. Target has added close to 200 new stories under Cornell's watch.
Walk its aisles and you'll see new private-label brands, such as children's apparel brand Cat & Jack, part of a multibillion-dollar portfolio that has set Target apart in retail. The stores are selling more groceries than ever and also featuring Ulta (ULTA) and Disney (DIS) shops.
Shipt is now integral to Target’s same-day delivery and pick-up options. The company just launched its first membership program, Target Circle 360, to compete with Amazon (AMZN) Prime and Walmart+.
This isn't to say Cornell hasn't faced additional roadblocks as he enters his final chapter at the helm.
Some shoppers haven't forgotten about the company's controversial approach to marketing Pride merchandise in 2023. Target has subsequently been forced to take a more measured approach to merchandise and marketing that may get swept into the cultural zeitgeist.
The retailer has only recently begun to slash prices on key household items like milk to wrestle back lost market share from Walmart, which has produced a stretch of superior sales and profit growth.
Target's second quarter same-store sales rose 2%, while Walmart's increased 4.2%.
Its stock is up 9% year to date, lagging the S&P 500's 20% gain. Walmart's stock shot up 52% this year, and Costco's (COST) has increased 39%.
"Brian Cornell did a great of reorienting Target. He got them out of Canada and refocused them on the real business," said retail expert Jan Kniffen. But Walmart has pulled ahead of Target in terms of operations and financial performance, a lead that may be in place for a while.
"Brian won a 10-year battle making Target a better retailer, but I fear he lost the war to Walmart and Amazon at the same time," Kniffen added.
In September 2022, Target scrapped its CEO retirement age of 65. Cornell signed on for three more years, making 2025 the year when a successor could be announced.
The top internal candidate looks to be Michael Fiddelke, who joined Target as an intern in 2003 and has risen the ranks to CFO and, most recently, COO.
Brian Cornell quote
Of course, Cornell could stay on for the job that clearly runs through his veins. He tells me he still "loves" what he does.
"One of the things that I spend a lot of time on and have for years is investing in talent development. I think as a CEO of a company like ours, it's one of my most important responsibilities is to make sure we're constantly developing talent to lead the company going forward," Cornell said about succession planning.
His legacy will be measured by the people he worked with, he said.
"Hopefully it goes back to the people that I've been able to mentor and coach and work with over the years that have moved onto bigger positions and had an impact. And hopefully, they'll remember the time and attention I paid to their development, that I was there when they needed somebody to talk to or the phone call that needed to be answered."
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