CNBC Exclusive: CNBC Transcript: CNBC's Courtney Reagan Speaks with Target Interim CEO John Mulligan Today on "Street Signs"

WHEN: Today, Wednesday, May 21st

WHERE: CNBC's "Street Signs"

Following is the unofficial transcript of a CNBC EXCLUSIVE interview with Target interim CEO John Mulligan today on CNBC's "Street Signs." Video from the interview is available at CNBC.com

All references must be sourced to CNBC.

COURTNEY REAGAN: MR. MULLIGAN, THANK YOU SO MUCH FOR JOINING US. I KNOW IT'S A VERY BUSY DAY. OF COURSE, YOU'RE NOT ONLY THE INTERIM CEO YOU'RE ALSO THE CHIEF FINANCIAL OFFICER, SO YOU'VE BEEN BUSY ON THE PHONE ALL DAY. IF WE COULD JUST GET STARTED WITH CANADA. LITTLE HAS GONE RIGHT FOR TARGET IN CANADA. IS IT WORTH IT? WHAT WOULD IT TAKE FOR TARGET TO EXIT CANADA ENTIRELY?

JOHN MULLIGAN: WELL, RIGHT NOW WE'RE FOCUSED ON ACCELERATING IMPROVEMENT IN CANADA AND WE'VE SEEN OVER THE PAST THREE MONTHS, WE'VE BEGUN TO GET THE STORES BETTER IN STOCK. WE'RE NOT WHERE WE NEED TO BE, BUT WE'VE BEGUN TO GET THE STORES BETTER IN STOCK. WE'VE ALSO BEGUN TO SEE OUR GUESTS RESPOND BETTER AS WE ARE SURVEYING THEM. WE'RE GETTING CREDIT FOR THOSE IN STOCKS, FOR THE VALUE WE PROVIDE, AND A BETTER VIEW OF OUR PRICING. SO WE'VE GOT A GREAT NEW LEADERSHIP TEAM IN PLACE, MOST OF THEM REPLACED OVER THE LAST QUARTER, AND THEY ARE FOCUSED ON ACCELERATING OUR IMPROVEMENT IN OPERATIONS, AND ALSO MORE BROADLY THAN THAT, LOOKING AT ALL ASPECTS OF OUR BUSINESS TO CONTINUE TO DRIVE IMPROVEMENTS IN CANADA.

REAGAN: SO YOU'RE NOT LOOKING TO LEAVE CANADA?

MULLIGAN: WE ARE VERY FOCUSED ON IMPROVING OUR OPERATIONS IN CANADA.

REAGAN: OK, SO THEN MOVING BACK TO THE U.S., YOU'VE SAID THAT YOU'VE MADE SOME INVESTMENTS IN IMPROVING SAME-STORE SALES AND TRAFFIC. BOTH HAVE BEEN DISAPPOINTING FOR A YEAR NOW. WHAT IMPROVEMENTS ARE YOU MAKING?

MULLIGAN: YEAH, I THINK COMING INTO THE QUARTER, THE THING WE COULD IMPACT THE QUICKEST WAS GIVING OUR GUESTS GREAT DEALS. WE PROVIDED SOME VERY COMPELLING PROMOTIONS TO THEM, AND WE SAW THEM RESPOND AND COME BACK TO OUR STORES. WE'LL CONTINUE TO USE PROMOTIONS AS WE GO FORWARD, BUT WE WANT TO NARROW THE FOCUS OF THOSE PROMOTIONS. AND IMPORTANTLY, GET BACK TO AND REMIND GUESTS OF WHY THEY FELL IN LOVE WITH TARGET IN THE FIRST PLACE. AND THAT IS ABOUT NEWNESS IN OUR STORES. SO YOU'LL SEE US BRING GREAT NEW MERCHANDISING INITIATIVES IN APPAREL, IN ENTERTAINMENT, IN MOM AND BABY, OVER THE COURSE OF THE NEXT YEAR. AND ALSO CONTINUE TO INCREASE THE AMOUNT OF NEW PRODUCT THAT'S IN OUR STORE. SOMETHING WE ARE GREAT AT IS BRINGING NEWNESS TO OUR GUESTS AND REMINDING THEM ABOUT WHY THEY LOVE TARGET.

REAGAN: SO WILL YOU BE ABLE TO AFFORD TO KEEP THAT LEVEL OF PROMOTION THAT YOU INTRODUCED AFTER THE DATA BREACH? ARE YOU WORRIED NOT AT ALL ABOUT THE MARGIN?

MULLIGAN: WE'RE ALWAYS CONCERNED ABOUT MARGIN, YOU KNOW, AS YOU KNOW, I'M THE CHIEF FINANCIAL OFFICER ALSO. BUT IT'S REALLY ABOUT STRIKING THE RIGHT BALANCE. WE WANT TO BRING GREAT PROMOTIONS TO OUR GUESTS, BUT ENSURE THEY'RE IMPACTFUL. AND WHERE THEY ARE IMPACTFUL, WE SEE THE LIFT IN SALES WE NEED TO PAY FOR THAT. THE FIRST QUARTER, WE USED A SIGNIFICANT AMOUNT OF PROMOTIONS, AND OUR GROSS MARGIN RATE WAS DOWN MORE THAN A FULL PERCENTAGE POINT. WE'LL STRIKE MORE OF A BALANCE AS WE GO FORWARD HERE AND FOCUS OUR PROMOTIONS AND START TO INTRODUCE THAT NEWNESS INTO THE STORE. SO THAT'S BOTH THE EXPECT MORE AND THE PAY LESS SIDE OF THE BRAND WE ARE PRESENTING TO OUR GUESTS.

REAGAN: IN THE EARNINGS RELEASE TODAY, YOU SAID YOU'RE NOT ABLE TO ESTIMATE THE COST OF THE DATA BREACH, BUT THAT IT MAY MATERIALLY IMPACT THE SECOND QUARTER, THE FULL YEAR AND BEYOND. HOW ARE INVESTORS SUPPOSED TO UNDERSTAND WHAT THE POTENTIAL COSTS COULD BE IF YOU'RE NOT ABLE TO QUANTIFY THAT?

MULLIGAN: THAT'S A GREAT QUESTION. UNFORTUNATELY WE'RE IN THE PLACE AS IT RELATES TO THE DATA BREACH, WHERE WE DON'T HAVE VISIBILITY YET TO THE POTENTIAL THIRD-PARTY LIABILITIES AND OPERATING EXPENSES THEY HAVE INCURRED. THE PROCESS IS FAIRLY WELL DEFINED BETWEEN US AND THE NETWORKS. THEY'LL COME BACK TO US WHEN THEY HAVE AN ESTIMATE OF WHAT THE INCREMENTAL EXPENSES MIGHT BE. AND THE PROCESS, YOU KNOW, WE DON'T HAVE VISIBILITY TO THAT, BUT WHAT WE HAVE SEEN IN OTHER CASES, IS THAT CAN TAKE SEVERAL MONTHS. AND CURRENTLY OUR VIEW IS THAT WILL LIKELY HAPPEN LATE SECOND QUARTER, COULD BE INTO THIRD QUARTER, AND OF COURSE AS WE KNOW MORE, WE'RE GOING TO PROVIDE THAT PERSPECTIVE TO OUR INVESTORS AND TO EVERYONE ELSE WHO IS INTERESTED.

REAGAN: MR. MULLIGAN, RIGHT NOW, OF COURSE, YOU ARE THE CHIEF FINANCIAL OFFICER, THE INTERIM CEO. WHAT IS TARGET LOOKING FOR, FOR THE IDEAL PERMANENT CEO? WHAT DOES THE RESUME LOOK LIKE? WILL YOU GUYS GO BEYOND TRADITION AND LOOK OUTSIDE TO AN EXTERNAL CANDIDATE?

MULLIGAN: WELL, CERTAINLY THAT'S THE BOARD'S JOB TO FIND THE IDEAL CANDIDATE. I CAN TELL YOU THE THREE FOCUS AREAS WHICH I'M SURE THEY'LL BE FOCUSED ON AS THEY THINK ABOUT THE NEXT INDIVIDUAL IS GROWING SALES AND TRAFFIC IN THE U.S., CONTINUING TO IMPROVE OUR PERFORMANCE IN CANADA, AND THEN THIRD, REALLY GETTING US TO BE A LEADING OMNICHANNEL RETAILER, ACCELERATING OUR TRANSFORMATION. THAT THIRD ONE PROBABLY THE MOST IMPORTANT. THAT'S WHERE THE MARKET IS GOING. THAT IS WHERE OUR GUESTS ARE, AND WE NEED TO ACCELERATE OUR TRANSFORMATION AND FINDING THE RIGHT PERSON WHO CAN LEAD THAT EFFORT WILL BE IMPORTANT FOR US GOING FORWARD.

REAGAN: AND SPEAKING OF ONLINE, MANY FOLKS LOOK AT YOUR OPERATIONS THERE AND SAY YOU'RE BEHIND THE CURVE. DO YOU THINK THAT TARGET CAN CATCH UP? AND IF SO, HOW ARE YOU GOING TO DO IT?

MULLIGAN: YEAH, I THINK WE'VE MADE GREAT PROGRESS. CERTAINLY WE'RE A LITTLE BIT BEHIND. WE STUBBED OUR TOE AS WE TRANSITIONED OFF OF AMAZON, BUT WE NEED TO CONTINUE TO ACCELERATE. THE GREAT THING WE CAN BRING IS OUR BRAND AND FOCUS ON MOBILE. OUR GUESTS – TWO THIRDS OF OUR TRAFFIC ALREADY COMES TO OUR SITE THROUGH MOBILE CHANNELS. WE'VE DONE A GREAT JOB THERE. WE JUST WON MOBILE RETAILER OF THE YEAR AWARD FOR THE SECOND TIME IN FOUR YEARS. GREAT APPLICATIONS LIKE CARTWHEEL THAT WE PUT OUT IN BETA AND CONTINUE TO REFINE BASED ON OUR GUEST FEEDBACK. THAT ALLOWS US TO GET SOMETHING OUT THERE, CONTINUE TO REFINE IT, TEST AND LEARN AND HONE IT. AND REALLY DELIVER WHAT THE GUEST WANTS. MORE APPLICATIONS LIKE THAT, AND WE'RE VERY FOCUSED ON ACCELERATING THAT TEST AND LEARN MENTALITY, AND WE BELIEVE WE WILL BE VERY COMPETITIVE IN AN OMNICHANNEL WORLD.

REAGAN: JOHN, BEFORE YOU GO, I HAVE TO ASK YOU, DO YOU WANT THE CEO JOB?

MULLIGAN: I WILL BE VERY CONTENT TO MOVE BACK TO MY CFO ROLE WHEN WE GET THE RIGHT INDIVIDUAL TO LEAD THE COMPANY GOING FORWARD.

REAGAN: OKAY. WE WILL SEE HOW THIS ALL SHAKES OUT. JOHN MULLIGAN, INTERIM TARGET CEO AND CURRENT CFO, THANK YOU SO MUCH FOR JOINING US. WE REALLY APPRECIATE IT.

MULLIGAN: THANK YOU, COURTNEY.

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