Brian Cornell named chairman and CEO at Target
Retail and consumer products veteran Brian Cornell was named chairman and CEO at Target to fill two of the three roles previously held by the company’s former top executive Gregg Steinhafel.
Cornell will assume his new responsibilities at Target on August 12 after most recently serving as CEO of PepsiCo Americas Foods for two years. He brings a well-rounded background in retail and CPG to Target. Prior to PepsiCo, Cornell served as president and CEO of Walmart’s Sam’s Club division for roughly three years. He came to Sam’s Club after serving as CEO of Michaels Stores and also held the role of chief marketing officer at Safeway. Earlier in his career, Cornell held general management positions at PepsiCo, including president of Tropicana, president of PepsiCo beverages for Europe and Africa, and president of PepsiCo North America Foodservice.
In a brief statement announcing his appointment, Target said Cornell’s top priorities would be to accelerate the company’s performance and advance its omnichannel evolution.
“As we seek to aggressively move Target forward and establish the company as a top omnichannel retailer, we focused on identifying an extraordinary leader who could bring vision, focus and a wealth of experience to Target’s transformation,” said Roxanne S. Austin, the interim non-executive chair of the Target board who led the search for Steinhafel’s replacement. Steinhafel, who also held the title of president, stepped down in early May and his responsibilities were filled on an interim basis by CFO John Mulligan.
“The board is confident that Brian’s diverse and broad experience in retail and consumer products as well as his passion for leading high performing teams will propel Target forward.”
Cornell said he was honored and humbled to join Target as the first CEO hired from outside the company.
“I am committed to empowering this talented team to realize its full potential, lead change and strengthen the love guests have for this brand,” Cornell said. “As we create the Target of tomorrow, I will focus on our current business performance in both the U.S. and Canada and on how we accelerate our omnichannel transformation.”
In exchange for his services, Cornell will receive a lucrative compensation package that includes an annual salary of $1.3 million, a 2014 pro-rated cash incentive equal to 150% of his base sales and stock-based awards with a potential payout of $3.75 million. In addition, in 2015 Cornell will received stock-based awards with a potential value of $9 million. Target is also on the hook to compensate Cornell for incentive awards and grants he forfeits by leaving PepsiCo. Target said it would provide Cornell with a make-whole equity grant and a make-whole pro-rata annual bonus valued at more than $19 million, minus whatever portion of that amount Cornell is able to retain from his former employer. Target said it was unable to determine that amount at the time details of his compensation were disclosed in a filing with the Securities and Exchange Commission.
Fortune Brands announces Q2 growth, Sentry Safe acquisition
After a slow first quarter, Fortune Brands and Home Security saw a second-quarter 10% year-over-year sales bump. The company also announced that it had acquired Sentry Safe for $117.5 million.
In the second quarter, Fortune Brands reported $1.4 billion in sales, and $136.6 million in operating income before charges and gains — a $20.1 million increase over the second quarter of 2013. The total company’s pre-gains operating income grew by 28%.
Sales also increased across Fortune Brands’ various product segments. The cabinetry division saw a 19% sales increase over the same period in 2013, with a 31% increase in pre-gains operating income. Both its security and storage, as well as its plumbing sales grew 5% over the same quarter in 2013. Its windows and door division saw a 53% year-over-year increase in income.
“Our teams executed well, delivering a solid second quarter as consumer traffic is increasing and demand gradually improved from the soft start to the year,” said Chris Klein, CEO of Fortune Brands. “We continue to gain share and remain on track to deliver strong growth this year.”
As its segments grow, the company’s holdings have as well. The Sentry Safe acquisition, which closed on July 29, will see the Rochester, New York-based safe company merged with Master Lock.
“Sentry Safe’s global brand strength in the adjacent personal safe market enables Master Lock to broaden its product offerings and leverage its iconic brand worldwide," Klein said. “Both companies hold similar competitive advantages in their markets and produce products that protect people’s most valuable assets.”
With the acquisition and its second-quarter growth, the company projects a market growth of 6% to 8%.
Weyerhaeuser turns a profit on forest products
Weyerhaeuser Co. reported strong figures for the second quarter of 2014, with positive results the company attributed to the recent divestment of its home-building business and doubled-down focus on its wood products.
"The strong results for each of our businesses in the second quarter reflect our relentless focus on operational excellence," said Doyle Simons, president and CEO. "Through the recent divestiture of our home-building business and last year’s Longview Timber acquisition, we have created a focused forest products company committed to driving operational improvements and fully capitalizing on the continued measured recovery in U.S. housing markets and the overall economy."
Net sales for the company tapped in at $1.96 billion, up 4.8% from $1.87 billion in the same period last year.
Net earnings attributable to shareholders was $280 million, up 42.9% from the second quarter of 2013. This includes an after-tax earnings of $22 million from discontinued operations, namely that of Weyerhaeuser Real Estate Company (WRECO), which merged with TRI Pointe Homes earlier in July.
Weyerhaeuser’s wood products business experienced a 19.9% sales boost to $1.07 billion, with higher sales volumes across the board and higher average selling prices for engineered wood products. However, there were lower average realizations for lumber and oriented strand board.
The company also noted strong demand for domestic and Chinese export logs, which contributed to higher volumes in the West.
Weyerhaeuser also predicted lower earnings for the third quarter from its Timberlands segment, with seasonally lower sales volumes and prices for domestic and export logs in the West. Higher silviculture and road costs are anticipated for the South, offset by increased fee harvest volumes.