Target CEO Brian Cornell speaks with Yahoo Finance's Brian Sozzi at Yahoo Finance's 2022 All Markets Summit.

Video Transcript

BRIAN SOZZI: Brian Cornell is the chairman and CEO of Target. He leads a team of more than 400,000 people working in almost 2,000 stores throughout the United States. Cornell is tackling some big issues head on. Inflation, a slowing economy, and those pesky supply chain issues.

But in a year of retail train wrecks-- yeah, that's you, Bed Bath & Beyond-- Target has outpaced the competition. In the fight to stay ahead, Cornell has made some very tough decisions, embracing the athletes mantra, no pain, no gain. And so far, it seems to be working. Target Chairman and CEO Brian Cornell joins us now. Brian, good to see you in person at Yahoo Finance HQ.

BRIAN CORNELL: It's great to be back together.

BRIAN SOZZI: So I've been making a list. I've been going to Target. I go there every weekend. You know this. And I'm like, I have to ask Brian these things when he's in person. First, the retail inventory glut. Is it over? When does it end?

BRIAN CORNELL: Yeah. Well, Brian, one, I appreciate the fact that you're always in our stores. And you do send me notes. And I appreciate that. And you know back in June, we made a pretty bold and decisive decision. We said, all right. Inventories have built up. Consumer shopping habits have changed. They moved into different categories. And we said we're going to get out in front of us.

So for Target, we put that inventory problem behind us. And now we can focus on great execution, delighting our guests, getting ready for the big holiday season. So we were pretty decisive and said, we're not going to just let this roll into the next quarter. We'll deal with it up front. And now we're excited that we're ready to play for the holiday season.

BRIAN SOZZI: I've followed your entire time as CEO at Target. And you've made a bunch of bold decisions. You exited Canada. First thing you did. I remember writing on that story as soon as it was out. Your 2017 investor conference. You were investing billions of dollars. Market didn't like it. Now you're clearing out inventory. How hard is it to make these decisions as a leader?

BRIAN CORNELL: Well, if I think about each one of those decisions, there was probably a very similar model that we followed. We said, all right. What's the right thing for the Target brand? What's the right thing for the Target guest? What's the right thing for our team? And when we think about it through that lens, it's always the right thing for our shareholder long term.

So whether it was leaving Canada and putting all of our focus on the US business or making that decision back in 2017 when others were closing stores, we said, we're going to double down on stores and put stores at the center of our strategy.

We took the same approach this summer and said, all right. Across all of retail, inventories have risen. We're going to get out in front of this and make sure that we have the right assortment, we deliver great value, we protect that guest experience in our stores, and we also did the right thing for our team.

BRIAN SOZZI: I think you mentioned this is your ninth holiday season as CEO of Target. How do you think this season will shape up compared to those other eight or nine?

BRIAN CORNELL: Well, Brian, you kno we spend a lot of time talking to consumers, talking to our guests. And the one thing we've heard throughout this year is they want to enjoy and celebrate seasonal moments. So the guest has told us they're excited about Halloween. It's still a few days away.

They're looking forward to Thanksgiving and celebrating with family and friends. And they are looking forward to the Christmas holidays. So we know the consumer in America, the guests that shops Target, they are excited about seasonal holidays. And we're going to be ready to make sure we delight them.

BRIAN SOZZI: Recession? Any indications you see? Store traffic? What they're buying? Anything that would suggest this could be a gloomy holiday season?

BRIAN CORNELL: Well, everyone's talking about recession. And sitting here today, there's different points of view. You talk to bank CEOs. Some gloom and doom. Others are saying really healthy consumer.

What we've seen all year long is really healthy traffic and a guest that's shopping in our stores and shopping online so that strength in traffic has been driving our business. We've delivered solid comps throughout this year. We expect that to continue over the balance of the holiday season.

BRIAN SOZZI: All right. That's good to hear. So back to my shopping list here, if you can just indulge me.

BRIAN CORNELL: Let's do it.

BRIAN SOZZI: 42 count of Tide Pods online-- $13. Now, I'm a dumb millennial. I don't keep track of things that I buy in terms of price. But to me, that seems like a lot. Are shoppers to your stores trading down? That seems like a lot of money for a basic essential.

BRIAN CORNELL: Well, Brian, core to our proposition is making sure we deliver great value and affordability every time you shop. So we measure pricing really carefully versus our competition. And we want to make sure we're priced right daily, we deliver great value and affordability. So on those items that you're looking at, we've got to make sure we have the right price every time you shop. And the guest expects that from Target.

BRIAN SOZZI: How is your private label business doing in this inflationary backdrop?

BRIAN CORNELL: It's been booming. So we now have a $30 billion own-brand business. $30 billion. And it's performed incredibly well throughout the pandemic and continues to grow.

So whether you're shopping Good and Gather or getting something for yourself, Goodfellow, that you can wear on set, or shopping any of our great brands. We now have $11 billion own brands in our portfolio. So that business just continues to perform and will perform over the holiday season.

BRIAN SOZZI: It's huge, Brian. So yesterday, I was actually in Bay Shore Target. Every weekend Bay Shore Target. Shout out Bay Shore Target. 15 registers open. 2 of them were self checkout. But 15 registers total. 11 were closed. Is that the worker shortage?

BRIAN CORNELL: Brian, we've been staffed throughout the pandemic. I mean, we have 400,000 team members across the country. And going back to 2017, you remember. We made a big commitment back then to invest in our team.

We said in 2017 we were going to get to a starting minimum wage to $15. Now, sitting here today, we made another big investment just a few months ago to say, all right, depending on the market, we're going to start at either $15, but it could be as much as $24 an hour to make sure that we have the team in place. We're going to hire another 100,000 seasonal team members for this holiday season.

So because of our investment in wages, in benefits, in training-- you know that we launched a debt-free educational assistance program last year. We've had over 70,000 team members raise their hands and say, I want to take advantage of that. So those investments have allowed us to retain and attract great talent. And we'll continue to make sure our team is our most valuable asset.

BRIAN SOZZI: 100,000 workers. That's a lot. Are you confident you can get that number?

BRIAN CORNELL: We are. We're off to a great start.

BRIAN SOZZI: Interesting. So you spent some time in the grocery industry. Of course, Target is big in selling groceries. And I know you watch the competition. What do you think about this Kroger and Albertsons merger? Does this change the game for the grocery industry? And does it make you change how you think about your grocery offerings?

BRIAN CORNELL: Well, we'll watch it carefully. Obviously, it's a new announcement. It's going to take some time to close. But we're going to continue to focus on our food and beverage business. We've seen really strong growth and market share gains for over 20 consecutive quarters. So the strength of that business has really connected with the guest during the pandemic and has come out of the pandemic is really a strong driver of growth.

So we're all in on the food and beverage business. We'll continue to invest. We've had a couple of great owned brands there. Good and Gather is a $2 billion brand for us now in food and beverage. The guest is really responded to a brand called Favorite Day. So we feel really good about food and beverage driving traffic and complementing our multi-category portfolio.

BRIAN SOZZI: I think I've seen wine at a Target too. These are big departments.

BRIAN CORNELL: They are.

BRIAN SOZZI: They're becoming really important to us.

BRIAN CORNELL: They're really important. And it's important for our guest. So we always listen to the guest. And they've told us food and beverage is an important category for them. It drives traffic. But I also know when they're there, they're beauty. They're shopping apparel. They're getting something for their home. So it complements our business really nicely.

BRIAN SOZZI: The new shops, the new cosmetic shops inside of Target, how are they starting?

BRIAN CORNELL: Oh, the Ulta Beauty inside of Target, it's been great.

BRIAN SOZZI: Bay Shore just got one. Again, shout out Bay Shore Target. It's a big part of the store. And the interesting thing is Brian-- and you know this, obviously-- walk into a store, it's right there. It's the first thing you see when you walk into these stores.

BRIAN CORNELL: Well, beauty has been an important category for years now. And Ulta just complements our beauty offering. And it was one of the things that our guest told us. We said, all right, what brand would you like to see here? On the top of their list, they said we love Starbucks. We love the fact you've got Disney stores--

BRIAN SOZZI: Don't take away my Starbucks.

BRIAN CORNELL: --and Apple stores. But they love the fact that we've added Ulta Beauty. So those partnerships, whether it's CVS and pharmacy and Starbucks in almost every store, more Apple shops, more Disney shops, and now Ulta, it just complements the great offering we have of national brands and own brands.

BRIAN SOZZI: You just signed on for another-- I think the press release said about three years. So let's just say three years. What is the next three years in Brian Cornell's life look like in terms of chairman and CEO of Target?

BRIAN CORNELL: I think it's going to be another chapter of growth for our company and continuing to invest in remodeling stores and building new stores in great locations like Bay Shore, developing our own brands, accelerating our national brand partnerships, and making sure that we continue to invest in our team. And there's lots of things I'm proud of. And the fact that we added $30 billion of growth since the start of the pandemic is something that our team feels really good about.

What I feel to me most-- what really fires me up is the investments that we've made in our team and seeing the diversity in our organization, seeing the growth opportunities, seeing our culture come to life. When I talk about culture, we always talk about a culture of care and growth and winning together. That's something that I'm going to continue to focus on for years to come.

BRIAN SOZZI: Brian, I've only known you to be a fired up guy. You're fired up right now talking about the Target's business and its future. Where does that come from on a personal level?

BRIAN CORNELL: Well, for me, this is an amazing brand. And I've got to tell you, Brian, I wake up every day feeling the responsibility of leading the Target brand, those 400,000 team members that work for us, those families that depend on us across the country. So I wake up with a huge sense of responsibility. And the pride I have in the team and that brand and the role we play in America is something that gets me up each and every day feeling great about the role that I sit in today.

BRIAN SOZZI: Growing up, did you see yourself as a CEO?

BRIAN CORNELL: Well, Brian, I think you know my story. And I grew up right down the road here in Queens as a poor kid who kind of has worked for everything I've had. And I never even imagined I'd be sitting in a chair like this. But I embraced the moment. And I just feel proud to work for a great company.

BRIAN SOZZI: I was just having a moment there. I very much identify with that, Brian. That much is for sure. How have you balanced it all? This has been a very challenging three years for executives. Not just CEOs. CFOs. COOs. How do you balance this time? And how do you just stay grounded?

BRIAN CORNELL: Yeah. Well, I'll go back to I work with a great leadership team, the best leadership team I've ever been part of. I have an amazing wife who's been married to me for 40 years now, a great family that supports me. And, as you know, I take care of myself. I make sure that I get to the gym every day and workout.

BRIAN SOZZI: You called my out on that. Yes, I shouted that out. And full disclosure, when, Brian, that news hit the wires that you were staying for three years, I said, look, Brian's a fit guy. He can stay on for another 15 years. How do you think about succession? At some point, you will not be the CEO of Target. Shareholders I'm sure won't like it. But is that one of your most important jobs right now outside of planning for holidays?

BRIAN CORNELL: Yeah. I think for any CEO, succession has to be something you focus on every day, not just for my role, but for my leadership team and the officers in those key roles throughout the company.

So we spent a tremendous amount of time. I have a fabulous HR partner, Melissa Kramer. And we spend time every week talking about talent. Last week, I was traveling. I was in Washington DC. I had a group of 28 Black Target officers that were with us in DC. We visited stores together. We spent time with outside speakers.

And I'm always investing in talent and making sure I get to know the team, I spend time with them, we travel together. But as a CEO of a company like ours, $106 billion growth company, you've got to constantly be focusing on talent development and thinking about who are the future leaders that are going to guide this company whenever that day comes and I'm not here.

BRIAN SOZZI: Fair enough. Before we let you go-- we're running short on time here-- let's go back to the economy real quick because you are up against the holiday shopping season. So you see no recession. You think consumers will spend this season like they spent last season.

BRIAN CORNELL: I think it's just a very unusual time from an economic standpoint. We're coming out of a pandemic. There were lots of stimulus checks that have been written, lots of child care support. We're starting to see a consumer get back to normal life. They want to travel again. They're out in restaurants. So sitting here today, we're on one side, we've got inflation that's at a 40-year high, but unemployment incredibly low. And I think those two things are balancing out right now.

So we continue to see a healthy guest shopping in our stores and shopping online. We'll see how they react throughout the holiday season. But when we talk to them, they continue to say they want to celebrate the holidays. And we know they're out on the streets of New York. They're in restaurants. They're in our stores. So right now, we're seeing a stable environment.

BRIAN SOZZI: Do you worry about-- I'm sure in the greenroom you heard Hilton CEO Chris Nassetta just talked to us about what the Fed may do to the economy. Do you fear the Fed and what they're doing?

BRIAN CORNELL: Well, we've got to watch it carefully. But in our business, Brian, we've got to be agile. We've got to prepare for any environment. It's part of the strength of our multi-category portfolio. We sell food and beverage products and household essentials. We have all your beauty needs. We have toys for kids and apparel and home items. So we'll balance our portfolio to make sure we're meeting the needs of the consumer no matter what the environment looks like.

BRIAN SOZZI: All right. Let's leave it there. Brian Cornell, always good to see you.

BRIAN CORNELL: Great to see you.

BRIAN SOZZI: It's been pleasure following your time as CEO of Target. I'm looking forward to continuing to follow it, indeed.