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Target CEO Brian Cornell speaks to Yahoo Finance

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In an interview with Yahoo Finance's Brian Sozzi, Target CEO Brian Cornell weighs in on inflation, supply chain woes and what's next for the company.

Video Transcript

BRIAN SOZZI: Target's CEO is Brian Cornell. He leads a team of more than 350,000 people working in 1,900 stores and locations throughout the US. Cornell gets a lot of credit on Wall Street for making Target cool again. And digital commerce is now at the heart of the company's business.

It's all paying off. The company's stock is on a tear. And in 2019, Target was named Yahoo Finance's company of the year.

[MUSIC PLAYING]

All right, I am joined now by Brian Cornell. Brian, always nice to talk with you here. The path forward for Target starts with the holiday shopping season, which is coming right up. How bullish are you on the US shopper?

BRIAN CORNELL: Brian, we're really excited about the upcoming holiday season. We've been preparing all year for this. And everything we hear from the consumer that we talk to on a regular basis is they're excited about the holiday season. They want to celebrate the holidays with family and friends. So we're planning for a very strong holiday season.

BRIAN SOZZI: What's driving that strength, Brian? We just had Bank of America's CEO on, Brian Moynihan. And he said the consumer is very strong. Why do you think you're still seeing shoppers so out there, just aggressively in your stores, spending, despite concerns about the Delta variant and despite, really, very high levels of inflation?

BRIAN CORNELL: Well, Brian, we've seen strength in our business throughout the pandemic. I go back to 2020. Our team delivered exceptional results, despite the challenges that we were facing. To grow our top line by $15 billion, to add $9 billion of market share, to see the way consumers and guests embraced both our stores and digital channels, I'm really proud of the efforts that our team have put forward over the last 20 months.

And I think our focus on safety, on taking care of our team and our guests, has just built enormous trust. And we're seeing that investment we made in our team, in safety and taking care of our guests, that's been paying off again in 2021. And we expect that to continue as we go into the holiday season.

BRIAN SOZZI: In terms of sales, Brian, and momentum, do you think this holiday season will be better than last year?

BRIAN CORNELL: Well, Brian, you and I are looking at all the same projections. And everyone that I've talked to, all the analysts that are looking at the holiday season, are expecting to see a very strong holiday season, consumers that are engaged, both shopping in stores and taking advantage of digital channels. And we certainly expect to see a very strong and robust holiday season.

We've been planning all year for this. And I'm really proud of the way our sourcing teams, our supply chain teams, our merchants, our marketers, and obviously our store teams are preparing for the holiday season. And we expect our momentum to continue.

BRIAN SOZZI: Brian, you've led Target for seven years as CEO. But I remember when you were still at PepsiCo. You've seen a lot of business cycles, a lot of inflationary cycles. In terms of what we're seeing right now, is this the worst inflation environment you have ever seen in your career?

BRIAN CORNELL: No, Brian. We see these things happen from time to time. And I think for us and for our team, this is a chance for us to leverage our scale, make sure we're taking advantage of our multi-category portfolio, leveraging the role that our own brands and national brands play, and really lean on the expertise we have in place today, the expertise we have in sourcing, the work our supply chain teams are doing, the work our merchants do each and every day, and importantly, the work our store teams do and our digital channels provide to make sure, even in an environment like this where we all saw the September CPI numbers, we've got to make sure that we leverage all of those components to continue to deliver value to our guests each and every time they shop at Target.

So we're looking at ways to make sure that, as we plan for the holiday season, we continue to stay focused on delivering great affordability and value to our guests, who are going to depend on that from Target each and every time they shop.

BRIAN SOZZI: Your customer is so price-sensitive, Brian. Who will bear the brunt of this inflation we are seeing? Look, Kimberly-Clark out this morning warning of even higher levels of inflation compared to where they were a couple of months ago. They're, of course, the makers of Kleenex. Does Target bear the brunt of this inflation? Or you're going to have to pass this onto the shopper?

BRIAN CORNELL: Well, Brian, as you might imagine, this is a time for us to work together with our vendor partners, think about how we leverage our national brand relationships, our own brand performance to really make sure that, even in an environment like this, we deliver a great value for our guests. And we've done that all year long.

And I look at the assortment we provided our guests during the Halloween season. We wanted to make sure there was great affordability in that assortment. We'll do the same thing during the holidays and make sure that we provide great value for the millions and millions of guests that are shopping our stores or our digital channels each and every week.

BRIAN SOZZI: Where do you come out on inflation Brian, in terms of the outlook? Is it in fact transitory? I sat down with P&G's incoming CEO John Mueller last week. And they're looking at their third round of price increases. Do you see the growth rate in inflation slowing into next year?

BRIAN CORNELL: Well, Brian, we're going to take it one quarter at a time. And obviously, we've talked to many of our vendor partners. They have seen pressure in their costs and in labor. And we've talked with many of them about the actions that they're taking. But we certainly expect this to modify over time.

But each and every quarter, this is what we do for a living. Working with our vendor partners, looking at our portfolio, looking at the assortment, and making sure that, even in times like this, we continue to deliver great value for the guest.

BRIAN SOZZI: Target's the second largest US importer, Brian. How are you overcoming these supply chain bottlenecks? What have you had to do to keep products on your shelves?

BRIAN CORNELL: Brian, I'll go all the way back to March of 2020. At the very start of the pandemic, we were actually hosting our annual investor conference. And the first question I received that day was about supply chain disruption because of COVID outbreaks in China. So we've been living with this and managing this for over 20 months now.

And I think in this environment, one, scale matters. Having the expertise in place and sourcing in supply chain, in logistics is really important. But what we really recognize is the importance of both resiliency in our model and agility and making the adjustments and the changes to ensure that we have the inventory in place to meet the needs of our guests.

So we've become much more agile. We've taken the steps that we've had to take to make sure that we adjust accordingly. We've been working very closely with the port operators to ensure that a lot of our containers are unloaded overnight.

We've focused on speed, making sure we can be in and out of those ports. So leveraging agility has been really important. And I can't tell you how proud I am of the work our teams have done to ensure that we have the inventory we need and we are prepared for this big holiday season.

So we've been working on this for months and months. But the agility that we've built into our system on top of the resiliency and the investments we've been making for years, that agility and flexibility has proven to be critically important as we plan for this holiday season and as we maneuver through the challenges of 2021.

BRIAN SOZZI: Do you think supply chain bottlenecks, they will go away next year?

BRIAN CORNELL: Brian, I think we have been seeing supply chain challenges throughout the pandemic. And whether it's factory closures in Asia, port operations that have slowed down in different parts of the world, the challenges with driver shortages in the United States, I don't think these issues are resolved overnight.

Obviously, we're very focused on making sure we play our role and help relieve some of the congestion in ports and move through the system. We're currently hiring 30,000 additional team members in our supply chain system to make sure we've got the team in place that continue to move through these challenging times.

But I think this is going to take quite a bit of time to sort out. And we're going to need to make sure we leverage our experience, our scale, the experience of our team, and that agility to make sure we continue to flow goods to our stores and our digital channels and meet the needs of our guests.

BRIAN SOZZI: Let's switch gears to those team members, Brian. True story, I was in a Target yesterday. I bought some Beyond Meat meatballs, some new makeup wipes for myself here, spent about $100, per the usual for me in Target. And I noticed a sign in the store, competitive wages for this particular Target, $16.75. Is that just the wage you need to now pay to get the workers you need?

BRIAN CORNELL: Brian, I think as you know, we have been focused on ensuring that we take a leadership position in pay and benefits going all the way back to February of 2017 when we made a commitment to get to a starting minimum wage of $15. And we've continued to invest in our team.

I think about all the changes we've made at Target over the last few years and the success that we've been driving. While we put tremendous capital into our stores, investments in our digital channels, in our brands, the most important investment we've made has been in our team. And that continues to be the case as we sit here in 2021.

We just recently announced the fact that, on key weekends during the holidays, we'll pay our teams an additional $2 an hour. We've been very focused on making sure that we focused on the safety of our team. And now we offered a very unique, debt-free educational assistance program. So we're going to continue to invest in our team to make sure that we have the best team in retail but also that we're offering a rewarding career opportunity for our team members.

So I'm really, really excited about the way our teams have showed up during the pandemic. I expect that to continue during the holiday season. And we're going to do the things that we have to do to make sure that we are a place where team members want to work, want to serve our guests. I think our purpose as a company, our focus every day on bringing that little bit of joy to all the families that shop at Target--

And our culture has been a real point of differentiation, a culture that starts with care and growth and winning together. And I think those investments in our team, surrounded by this company purpose and culture, that's why we've been able to navigate during a very challenging labor environment.

BRIAN SOZZI: Brian, we are running a little short on time. So I'm going to go a little bit off-script here. You've made a lot of big moves at Target since you joined the company in 2014, closing down Canada's stores, feels like yesterday it wasn't, opening CVS Pharmacy shops, Disney shops, many other shops, now Ulta makeup shops. What's next for you as the CEO of Target? And what's next for Target itself? Where else do you see opportunities to reinvent yourself?

BRIAN CORNELL: Brian, we're always looking around corners and always spending time listening to the consumer, talking to the Target guest, really ensuring that we're meeting their needs. We're driving differentiation through our multi-category assortment, that unique mix of own brands and national brands. And we're really excited about some of those partnerships, partnerships like Ulta, what we're doing with Levi's and Disney, the expansion of Apple stores within our stores, the investments we've been making in our digital fulfillment capabilities, the important role that drive-up is played during the pandemic or having that Shipt shopper come to your home.

So we're always looking to innovate. But it starts with a focus on the consumer, our guest, how we build more relevance, how we deepen that relationship, how we bring things like Target Circle to life to really personalize the way we interact with millions and millions of guests. And we have over 100 million members in Target Circle. So building on those relationships, making sure we continue to inspire our guests when they shop our stores or shop target.com, but also make it really easy and convenient to shop one of our 1,900 stores.

So we'll always be looking around corners. We are a growth company. And we'll continue to be a growth company. We see significant market share opportunities across our portfolio of categories. So we'll be investing in growth, investing in our business, and importantly, investing in our team for years to come.

BRIAN SOZZI: Brian, lastly, I want to give you a shout-out here. Last week, your wife and yourself donated $10 million to Florida's Sarasota Memorial Health Care System with a focus on mental health. Why was that so important to you?

BRIAN CORNELL: Brian, I think we've seen throughout the pandemic the challenges that millions of families are faced with different mental wellness issues. And Martha and I realized that this is a way we could really make an impact and help address the stigma that surrounds some of these conversations, improve the quality of care, and hopefully inspire others to get involved and invest in a space that I think has been, in some cases, overlooked for years now and elevate the conversation, give back in a community that's been part of our lives for almost 30 years now, and really make a lasting impact.

So we are really proud of this initiative. We think it's going to have a lasting impact on thousands and thousands of families. And hopefully it inspires others to have the conversations, to prioritize mental health and wellness with their teams as they go forward, and together have an impact on families across this country.

BRIAN SOZZI: Really good to see it. We'll leave it there. Target chairman and CEO Brian Cornell, have a great start to the holiday season. Thanks for stopping by the Yahoo Finance All Markets Summit.

BRIAN CORNELL: Brian, thank you. It's always good to see you.

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