Brian Cornell continues to shake things up at Target Corp.
Proof of the chief executive officer’s mission to transform Target into a more nimble and efficient omnicentric company is evinced by Kathee Tesija’s move into an advisory position. The mass retailer said today that Tesija, executive vice president, chief merchandising and supply chain officer of Target, takes on the role beginning July 6.
“Kathee cultivated a very strong organization underneath her,” said Amy Koo, a senior analyst at Kantar Retail. “She understood the culture — as she knew it. Symbolically, she was seen as part of the old guard. Part of the real reason it’s not going to work out for Kathee is because she’s part of the entrenched way of doing things.”
Koo added that for “a significant number of people there’s going to be a shake-up. This is a new Target. Exiting Canada and reinventing grocery … it’s not the way things were done.”
A Target spokeswoman said a search for Tesija’s replacement begins immediately.
“They’re looking internally, but I fully expect they’ll hire someone from outside the organization,” Koo said.
Since becoming chairman and ceo last July, Cornell quickly closed the money-losing Canadian operations and outlined priorities such as enhancing technology, supply chain and inventory management. Cornell in March promised to create a more efficient and agile headquarters team, which led to 1,700 layoffs in March and 140 more last week.
“During Kathee’s 30-year career at Target, she has earned a reputation as an outstanding merchant and business leader who has been instrumental in Target’s growth and our recent efforts to regain our momentum,” Cornell said. “Her countless contributions helped establish Target as one of America’s favorite retailers.”
Cornell and Tesija had “many discussions about the business and together have decided that it is the right time for her to transition to an advisory role,” he said. “In this role, she will spend the next several months contributing to key enterprise initiatives and ensuring a smooth transition of her responsibilities.
“This role is critical to ensuring Target’s future success and we are conducting a comprehensive external and internal search for a new leader,” the ceo added.
Sources said the discussions grew out of Target’s Financial Community Meeting in March, where Cornell discussed his goal of transforming Target’s business from top to bottom. “Since Brian Cornell took over, he has attempted to reposition Target to recapture its cheap-chic/’Tar-jay’ image,” said Joseph Feldman, a retail analyst at Telsey Advisory Group in a research note. “The company is transitioning its merchandise assortment to a focus on signature categories such as style, kids, baby and wellness. It makes sense to us that a fresh perspective from the head merchant is warranted.”
Feldman noted that Target’s recent performance is beginning to benefit from changes in merchandising, marketing and store presentation. “Signature categories are helping lift the total company comp to our forecast range of 2 to 2.5 percent,” he said.
Tesija will no longer be classified as an executive officer after July 6, but will remain employed by Target until April 1, 2016, to assist with the transition of her responsibilities and provide advisory services. She’ll continue to receive her base salary through April 1, 2016, and target bonus opportunity for fiscal year 2015 performance. She’ll be eligible for severance payments after her advisory role ends.
“She and Brian will start to narrow down projects,” said a Target spokeswoman. “They will be directly related to key strategic enterprise initiatives.”
During her tenure at Target, Tesija worked with most of the product categories sold at the store. Tesija joined Target in 1987 as a buyer, manager and business analyst for housewares and toys. She rose to vice president and general merchandise manager for toys and sporting goods in 1999. Two years later, she became senior vice president of hardlines, health, beauty, baby and household essentials. Tesija in 2008 was promoted to EVP, merchandising, design, sourcing and supply chain. In 2001, she added Target.com to her responsibilities.
Target had less than 300 stores when Tesija came on board and e-commerce wasn’t part of the common vocabulary. “She grew up doing merchandising and expanded into product design and e-commerce and digital and was overseeing supply chain as well,” said a retail expert. “She’s really talented.”
Tesija’s product development hat was earned when she developed partnerships with designers. Among the coups were attracting hot young designers such as Joseph Altuzarra, Jason Wu and Phillip Lim.
But a 2011 Missoni collaboration was a public failure when Target’s Web site crashed under the weight of consumer demand. The wildly popular Lilly Pulitzer hookup in April sold out too quickly because Target underestimated the demand for product. A 2012 holiday partnership with Neiman Marcus got lots of publicity, but sales reportedly didn’t meet expectations.