Target CEO: How we created Black Friday in April
In Jim Cramer's long career studying businesses, he knows that there are only a few things more difficult than turning around a struggling department store chain. Yet, that is exactly what Target (TGT) has managed to do.
After years of disappointment under former CEO Gregg Steinhafel, Target has managed to go from troubled to thriving under leadership from new CEO Brian Cornell. Following a massive data breach and a poorly run expansion into Canada , Cornell took hold of the reins and got Target back on track.
The stock has reflected the rebound, providing a fantastic 40 percent return since he first took over a little less than 10 months ago. Additionally, Cornell has overseen major improvements in Target's U.S. core business. When it reported a little over a week ago, it posted a 7-cent earnings beat from a $1.03 basis, higher than expected revenues and a 2.3 percent increase in same- store sales.
Can this stock continue to make a miraculous recovery? To get the information straight from the source, Cramer sat down with Cornell himself.
The CEO explained that in the past year, the company has elevated its focus on signature categories, specifically relating to style. This includes apparel, home, and beauty, along with baby, kids and wellness. Target has taken the time to try and understand its shopper in order to ensure that stores provide what they expect.
"It's all about making sure every day we deliver that expect more, pay less experience," Cornell said.
In April, Target created a shopping frenzy when it announced a collaboration with the well-known brand Lilly Pulitzer.
"We were able to create Black Friday in April. We had hundreds and hundreds of guests lined up all excited to get in there and shop that collection... Lilly was the 151st collaboration, and we've got more in the pipeline," Cornell added.
The CEO anticipates that the design and development team will continue to work to make sure that customers are excited with future collaborations as well. With doing that, this means understanding who the new consumer in department stores are.
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Cramer pointed out that the consumer has drastically changed in the past 15 years to go from a largely white middle class, to including many different demographics. Statistics show that Hispanics have been a driving force behind a lot of Target's growth, so how can Target appeal to all of those different constituencies at once?
"We really can't. We've got to make sure we stay very focused and we understand our sweet spot. Our sweet spot today is what we call the demanding enthusiast," Cornell said.
Cornell added that the millennial family these days are very diverse, love to shop, expect great value and are digitally connected. So that means in one hand they could have a shopping cart, and the other hand a smart phone. His goal is to ultimately make sure that Target embraces the new consumer, and continues to appeal to them with dazzling collaborations in the future through localization, and a thorough understanding of their customer.
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