Target Corp. is bringing in PepsiCo Inc. executive Brian Cornell as its new chief executive, turning to an outsider for the first time in its history to repair a battered corporate culture and navigate a sea change in Americans' shopping habits.
Brian Cornell will become chief executive of Target Corp. Reuters
Mr. Cornell, age 55, steps into the role vacated three months ago by Gregg Steinhafel, a Target veteran who left after a revolt by key lieutenants who worried the cheap-chic discount retailer had lost its way.
The PepsiCo executive will have to manage those concerns while coming up with a strategy to reverse more than a year of falling store traffic—a drop caused by internal fumbles; a damaging security breach of its customers' credit and debit cards; and a shift in which consumers are making fewer trips to big-box stores and doing more shopping online.
The executive has spent nearly a decade at PepsiCo, where he was an outside contender to succeed current CEO Indra Nooyi. Not all of his years at PepsiCo were consecutive, but over the past two years he ran PepsiCo's Americas Foods business, whose brands such as Quaker oatmeal and Lay's potato chips are found on the shelves of Target. Before that, he spent three years at Target rival Wal-Mart Stores Inc., where he ran the Sam's Club warehouse chain. He also was CEO of arts and crafts chain Michael's Stores Inc. for two years, after it was taken private.
Target, with more than 1,900 stores in the U.S. and Canada and nearly $73 billion in 2013 revenue, has had a difficult year. A massive data breach derailed sales over the holiday season and kept customers away for months. Sales started to improve in March as the weather warmed and after the retailer cranked up discounts, like offering five 12-packs of Coke for $10, but the company forecasts same-store sales will be flat to slightly up in the U.S. for the quarter that ends Aug. 2.

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Fixing those problems will require some big decisions. The new CEO is expected to make a call on whether Target should continue a botched expansion into Canada that already has cost the company $1.6 billion. The e-commerce division remains weak, with only about 2% of sales coming via the Internet.
Target is also wrestling with deep-seated cultural issues that factored heavily in the removal of Mr. Steinhafel. Current and former executives have said decision-making slowed down during his six-year tenure, with key decisions frozen in layers of committee meetings.
They also said the former CEO eroded Target's creative flair by focusing more on selling basics like groceries as the country came out of the recession and de-emphasizing the hip housewares that once were central to its appeal. This spring, some top executives told the board that if Mr. Steinhafel didn't go, more talent would leave. Mr. Steinhafel declined previously to comment on those matters.
Target had signaled that it would look outside its walls for its next CEO. Pictured, a Target in Minneapolis.Jenn Ackerman for The Wall Street Journal
Target had signaled that it would look outside its walls and outside of traditional retailing altogether for its next CEO.
In fact, it is bringing someone with a history in the industry, including a stint at Wal-Mart, whose no frills, operationally focused culture contrasts with the design-conscious image Target projects. His most recent experience is in food, which may clash with the preference of many Target executives to re-emphasize more fashionable merchandise like clothing and furniture. He joined the PepsiCo fold in 1998 after the company acquired the Tropicana orange juice brand, where he worked earlier in his career.
PepsiCo said it looked forward to working with Mr. Cornell at Target and would announce his successor soon.
Target is currently being steered by Chief Financial Officer John Mulligan, who is serving as interim CEO, and a group of top executives who have been relocated to common quarters on the 26th floor at Target's Minneapolis headquarters.
Mr. Cornell, who has long sought to run a public company, begins his new job Aug. 12. He first started talking with Target several weeks ago after people in the Minneapolis business community mentioned him as an attractive candidate for the job. He has ties to the city as a director at recreational vehicle maker Polaris Industries Inc. He plans to relocate to Minneapolis and will be at Target headquarters Thursday to meet with the company's leadership team in person. Mr. Cornell has already met with some top executives like Mr. Mulligan, who will be returning to his position as chief financial officer.
"Target is full of talented individuals, and Target guests routinely share stories of their personal love of the brand," said Mr. Cornell, who attended University of California, Los Angeles, and its Anderson School of Management. "These are powerful assets."
Meshing with them will be critical after the deep rifts that developed between top managers and Mr. Steinhafel. The animosity escalated after hackers compromised 40 million credit- and debit-card accounts and 70 million personal records around Thanksgiving. Top managers began to meet regularly without Mr. Steinhafel and lobbied Target's board to replace him, people familiar with the matter have said.
Mr. Cornell's appointment does leave some question marks about some executives. Chief among them is the future of Kathee Tesija, Target's chief merchandising officer who has been viewed a strong candidate to one day become the company's CEO. The Pepsi executive will be chairman as well as CEO, but the company is leaving open the president's title that had been held by Mr. Steinhafel.