When he crossed over to Target (TGT) from Pepsico (PEP) in 2014, chief executive Brian Cornell was expected to retire by 2024 — that was when he would turn 65 and, according to longstanding corporate rules at the retail giant, that was also the mandatory retirement rules on its books.
But times change and rules can be updated and amended. On Sept. 7, Target shares rose by more than 4% after the retailer announced that it would scrap its retirement age to allow 63-year-old Cornell to stay on for three more years.
Shares in the company are down more than 26% since the year began amid a difficult year in which Target cut guidance twice and released a second-quarter earnings report that missed expectations amid slowing post-pandemic demand for online shopping and industry-wide supply chain
"In discussions about the company’s longer-term plans, it was important to us as a board to assure our stakeholders that Brian intends to stay in his role beyond the traditional retirement age of 65," Monica Lozano, lead independent director of Target's board of directors, said in a statement.
Image source: John Smith/VIEWpress.
Meet Chief Executive Officer Brian Cornell
Prior to coming onboard to lead Target in 2014, Cornell spent two years leading soft beverage giant Pepsico. He has a long history leading large chains and food companies — he became executive vice president of supermarket chain Safeway in 2004, became CEO of craft supply retailer Michaels in 2007, and then led Walmart (WMT) subsidiary Sam's Club between 2009 and 2012.
He currently also serves as the non-executive chairman of Yum! Brands (YUM), which owns major fast food chains including Taco Bell, Pizza Hut, and KFC.
Cornell oversaw a turbulent time in Target's history — while the big box chain saw a spike in profit at the start of pandemic-fueled lockdowns, it failed to retain that momentum as shopping habits in the following year stabilized while many department stores continued stocking items in greater quantities.
Cornell's leadership pushed Target to add more private label brands in areas like fashion, activewear, and home décor.
The retail giant also expanded the ability to order things online by adding curbside pickup, and expanding its warehouse space.
But that was still not enough and in August, Target still reported that earnings fell by more than 90% compared to the same time last year.
Target And The Way Forward
During past earnings calls, Target leadership named everything from inflation to the supply chain for the disappointing numbers. In the end, the board of governors decided that they are confident in Cornell's ability to guide the company into better days.
"We enthusiastically support his commitment and his continued leadership, especially considering his track record and the company’s strong financial performance during his tenure," Lozano said.
Separately, Target announced that its Chief Supply Chain And Logistics Officer Arthur Valdez would retire after six years in the role. Gretchen McCarthy, who is currently the senior vice president of global inventory management, will replace Valdez in a role that is particularly under the microscope given global issues with supply.
Besides vague words like "commitment" and "purpose-driven strategy," the board did not elaborate on why it was so important to amend its retirement age specifically for Cornell.
"Being a Target team member has been the high point of my career, and I’m energized about leading the company in the years ahead as we build on the growth we’ve already accomplished," Cornell said in a statement.
