SOURCE: THE COMPANY
–2
0
2
4
6%
COMPARABLE SALES GROWTH (YEAR OVER YEAR)
2015 2017 ’19
Q1 2019:
4.8%
$7 BILLION STORE
INVESTMENT PLAN
LAUNCHED
SOURCE: BLOOMBERG
40
50
60
70
80
$90
TARGET STOCK PRICE
JULY 2014 AUG. 2019
AUG. 5, 2019:
$80.79
$7 BILLION STORE
INVESTMENT PLAN
LAUNCHED
129
FORTUNE.COM // SEPTEMBER 2019
rolling out smaller, brand-new locations in dozens of higher-end
city neighborhoods. Changes visible to shoppers include fancier
presentation of apparel (think mannequins sporting “looks,” in-
stead of stacks of shirts on shelves) and better-lit, sleeker checkout
areas. Just as important, behind the scenes, is the retooling of
backroom space to facilitate e-commerce—which helps Target earn
more on its digital sales.
The outcome? Two and a half years after its big bet spooked
shareholders, Target is posting ticker-tape-parade-worthy results.
The company has notched eight straight quarters of comparable
sales increases. Target’s total first-quarter sales hit $17.4 billion,
8.7% higher than the same quarter in 2017. That’s phenom-
enal growth by retail standards, and the “comp” growth rate has
outpaced that of most of Target’s rivals, including Macy’s, Kohl’s,
and Walmart. And while operating profit margins initially shrank
slightly under the $7 billion plan, total earnings remained steady
and recently began to tick up again.
Just as important to Target’s future: Its products are buzz worthy
once more. Two of the brands Target has launched since 2016
already reap $1 billion or more in annual sales, and it has won sub-
stantial market share in areas like swimwear, toys, and men’s cloth-
ing. All the momentum suggests that Target has recovered its long-
absent swagger, says Charlie O’Shea, an analyst at Moody’s: “What
Cornell and this team have done is to bring it back to Tarzhay.”
oF COURSE, TARGET EXECUTIVES know what it’s like to celebrate
prematurely. In September 2015, a little over a year after
he became CEO, Cornell had basked in a standing ovation
during a companywide staff meeting at the Target Center arena in
Minneapolis. He was grinning with satisfaction as he stood below
a Jumbotron that displayed a graphic showing Target’s shares ris-
ing—and Walmart’s stock falling—over the preceding year.
Cornell, a PepsiCo veteran who was Target’s first CEO from
outside the company, had taken the job during a particularly bad
spell, one that included a massive data breach and a catastrophic
expansion into Canada. His early days were a hit, however, thanks
to several splashy moves. Cornell sold Target’s $4-billion-a-year
pharmacy business to CVS Health. The company launched “in-
novation labs” meant to quicken Target’s tech metabolism. And the
new Cat & Jack children’s apparel brand was a runaway hit with
young mothers, quickly becoming a $2 billion business.
But those successes masked some deeper structural problems.
Target was being outflanked by Walmart and others in retail’s price
wars—particularly in apparel, where most of its older brands no
longer had enough appeal to draw customers away from cheaper
rivals. Target also stumbled in the culture wars: After the company
spoke out about allowing transgender shoppers and employees to
use the restrooms of their choice, boycotts in relatively conserva-
tive markets like Dallas ate into its sales.
Bigger headaches lurked behind the scenes. Target wanted to
bolster its e-commerce with “ship from store” operations, using
store inventory to fill online orders. But inventory management was
so bad that chief operating officer John Mulligan had to pause an
early pilot project. Target had long struggled
with being out of stock on popular items—and
it’s hard to ship an item, or invite a customer
to retrieve one, if you don’t have it in the store.
This was exactly the kind of lackluster
execution that Cornell’s renovation plan
was designed to fix. But like other retailers,
Target faced a bind with investors: Wall Street
wanted brick-and-mortar giants to do moreSECOND TIME’S THE CHARM
Target’s comeback effort under CEO Brian Cornell
initially fizzled, but doubling down on stores has
revived the retailer’s fortunes.