Target Promotes John Mulligan to Chief Operating Officer -- 3rd Update

By Paul Ziobro 

Target Corp. Chief Executive Brian Cornell promoted his finance chief, John Mulligan, to the newly created role of chief operating officer, as the retailer continues to remodel its executive team.

Mr. Mulligan, 49 years old, will be succeeded as chief financial officer by Cathy Smith, the former CFO of the pharmacy-benefits manager Express Scripts Holding Co. Ms. Smith, who is 51 years old, has also held senior finance roles at Wal-Mart Stores Inc. and GameStop Corp. The appointments are effective Sept. 1.

Mr. Mulligan, who served briefly as interim CEO last year before Mr. Cornell joined Target, will be given oversight of a broad range of businesses, including stores, the supply chain and properties. He had been CFO since 2012.

The creation of a chief operating officer is also an acknowledgment of the broad challenges retailers face in a rapidly changing environment. Target and others must ensure the execution of basic tasks like making sure shelves are stocked and stores are staffed, while also managing a shift to a more complex supply chain where online shopping has retailers scrambling to fulfill orders in different ways.

Wal-Mart Stores Inc. has also seen the importance of its operating chief rise over the past year. Judith McKenna, who was promoted to chief operating officer of Wal-Mart U.S. in December 2014, has become a key member of the executive team working on the retailer's mission to make its stores cleaner and faster in advance of the holiday season.

Target's shift to smaller, more urban stores also requires the retailer to rethink a supply chain that has long relied on shipping mass quantities of goods to large, suburban locations.

The change isn't only complex, but expensive. Target is spending around $1 billion this year on supply chain and technology investments.

Target had previously bundled oversight of merchandising and supply chain under one position, which until recently was held by Kathryn "Kathee" Tesija. Current and former Target executives, as well as some suppliers, said that was too much responsibility for one person to handle. Ms. Tesija stepped down from her position last month and Target is currently searching for a top merchant.

In a memo to employees, Mr. Cornell said the changes "will allow us to accelerate operational improvements and strengthen the fundamental areas of our business."

Ms. Smith spent less than a year as Express Scripts's finance chief before leaving in December, citing a desire to pursue other interests. At Target, she received a $500,000 signing bonus and will be paid an annual base salary of $725,000.

Mr. Cornell, a former senior PepsiCo executive , has just finished his first year at Target. He has focused the company on just five key categories, including baby, kids and wellness products, and has also placed a greater emphasis on fixing Target's lagging digital business.

He has also pulled the company out of Canada, announced a sale of Target's pharmacy business to CVS Health Corp. and laid off thousands of employees. His progress will be measured Wednesday, when Target reports second-quarter results. The shares have gained 35% in the past 12 months.

Tess Stynes and Sarah Nassauer contributed to this article.

Write to Paul Ziobro at [e-mail]

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(END) Dow Jones Newswires

August 17, 2015 15:37 ET (19:37 GMT)

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