×

CNBC EXCLUSIVE: CNBC TRANSCRIPT: TARGET CHAIRMAN & CEO BRIAN CORNELL SPEAKS WITH CNBC’s COURTNEY REAGAN TODAY

WHEN: Today, Wednesday November 15, 2017

WHERE: CNBC's "Squawk on the Street" - Live from a Target store in Minneapolis, Minnesota

Following is the unofficial transcript of a CNBC EXCLUSIVE interview with Target Chairman & CEO Brian Cornell and CNBC's Courtney Reagan on CNBC's "Squawk on the Street" (M-F 9AM-11AM) today Wednesday, November 15th. Following is a link to video from the interview on CNBC.com: https://www.cnbc.com/video/2017/11/15/target-ceo-we-feel-really-good-about-store-performance.html.

All references must be sourced to CNBC.

CARL QUINTANILLA: WELCOME BACK TO "SQUAWK ON THE STREET." LET'S GET TO OUR COURTNEY REAGAN, WHO IS IN MINNEAPOLIS SITTING DOWN WITH THE CEO OF TARGET, BRIAN CORNELL. MORNING, COURT.

COURTNEY REAGAN: THANK YOU VERY MUCH. GOOD MORNING TO YOU, CARL. I'M HERE IN MINNEAPOLIS, JUST DOWN THE STREET OR ACROSS THE STREET REALLY FROM TARGET HEADQUARTERS. BRIAN, THANKS SO MUCH FOR BEING HERE WITH US TODAY. SO YOU PUT OUT YOUR EARNINGS, YOU BEAT ACROSS THE BOARD. SHARES ARE LOWER, THOUGH, BECAUSE OF THE HOLIDAY FORECAST THAT'S IMPLIED. LOOKS LIKE YOU THINK PROFIT WILL BE LOWER THAN WHAT THE STREET IS HOPING FOR. SO IS THAT A RESULT OF YOU BEING CONSERVATIVE OR ARE YOU EXERCISING SOME CAUTION BASED ON WHAT YOU HAVE SEEN IN EARLY NOVEMBER SO FAR?

BRIAN CORNELL: COURTNEY, I'M ACTUALLY SURPRISED WITH THE REACTION. WE HAD A REALLY SOLID Q-3. TRAFFIC WAS UP 1.4. OUR COMPS UP 90 BASIS POINTS. DIGITAL GREW BY 24%. SO ALL THE LEVERS WE LOOK AT ARE WORKING WELL. OUR BRANDS HAVE BEEN WELL RECEIVED. OUR SMALL STORES OFF TO A GREAT START. OUR REMODEL STORES, LIKE THE ONE WE'RE IN TODAY, DELIVERING EXACTLY WHAT WE EXPECTED. SO, SO MANY OF OUR ELEMENTS ARE WORKING WELL, AND IT SHOWED UP IN OUR Q-3 RESULTS AND WE EXPECT THAT TO CONTINUE IN Q-4. SO OBVIOUSLY, WE PROVIDED GUIDANCE. WE THINK OUR COMPS ARE GONNA BE BETWEEN FLAT AS MUCH AS PLUS TWO, SO CONSISTENT WITH WHAT WE HAVE SEEN THROUGHOUT THE YEAR. WE RAISED OUR FULL YEAR FORECAST FOR EPS. VERSUS WHERE WE ARE WHEN WE TALKED BACK IN FEBRUARY, WE HAVE RAISED OUR EPS FORECAST BY 50 CENTS. SO I'LL DO THE MATH FOR YOU. THAT'S $500 MILLION.

REAGAN: RIGHT.

CORNELL: SO WE'RE SEEING GOOD FLOW THROUGH. SO WE FEEL REALLY GOOD ABOUT OUR PERFORMANCE, THE PROGRESS WE'VE MADE, AND I FEEL REALLY CONFIDENT THAT WE'VE GOT ALL OF THE ELEMENTS WORKING WELL AS WE GO INTO THE FOURTH QUARTER.

REAGAN: SO IT DOESN'T SOUND LIKE YOU'RE WORRIED ABOUT WHAT YOU HAVE SEEN IN EARLY NOVEMBER? YOU FEEL GOOD?

CORNELL: I FEEL GREAT ABOUT THE START OF THE YEAR.

REAGAN: OKAY.

CORNELL: AND THE START OF THIS FOURTH QUARTER. YOU KNOW, OUR NEW BRANDS HAVE BEEN INCREDIBLY WELL RECEIVED. IT WAS JUST A COUPLE DAYS AGO, WE INTRODUCED HEARTH & HAND, OUR COLLABORATION WITH CHIP AND JO. AND THE REACTION ACROSS THE COUNTRY HAS BEEN AMAZING. IT'S DRIVING TRAFFIC TO OUR STORES, VISITS TO OUR SITE. THE GUEST LOVES THE COLLECTION. SO WE'RE OFF TO A GREAT START. AND IT'S STILL EARLY. WE'VE GOT A LOT OF WORK TO DO. BUT WE FEEL REALLY GOOD ABOUT OUR POSITION AS WE GO INTO THE FOURTH QUARTER.

REGAN: YOU STARTED TO DIG THROUGH THE NUMBERS A LITTLE BIT AND YOU MENTIONED COMP SALES ARE UP 90 BASIS POINTS. THAT WAS DOUBLE WHAT THE STREET WAS EXPECTING. BUT DIGITAL WAS RESPONSIBLE FOR 80 OF THOSE BASIS POINTS, BUT IT'S STILL A VERY TINY PORTION OF TARGETS BUSINESS. SOMETHING LIKE UNDER 5% OF TOTAL SALES. SO IF 120th OF THE COMPANY IS RESPONSIBLE FOR ALMOST ALL OF THE SALES GROWTH, WHAT DOES THAT MEAN FOR THE STORES THAT YOU GUYS ARE LEANING MORE INTO, AS OPPOSED TO PULLING BACK AND CUTTING DOWN ON YOUR STORE FLEET?

CORNELL: WELL I FEEL GOOD ABOUT OUR STORE PERFORMANCE. YOU KNOW, IT'S STABILIZING WE SAW A FLAT COMP IN OUR STORES, BUT OUR STORES ARE ENABLING OUR DIGITAL PERFORMANCE. SO OVER HALF OF OUR DIGITAL GROWTH IS REALLY ENABLED BY OUR STORES. WHETHER IT'S SOMEONE ORDERING ONLINE AND PICKING UP IN A STORE, NOW IN MINNEAPOLIS, SOMEONE ORDERING AND DRIVING UP TO A STORE. WE SHIP FROM STORE, OBVIOUSLY, AND NOW 1400 LOCATIONS. SO OUR STORES REALLY ENABLE OUR DIGITAL GROWTH AND I LOVE THE FACT THAT SOME DAYS GUESTS ARE IN OUR STORES AND ON A GIVEN WEEK, ABOUT 30 MILLION AMERICANS SHOP IN OUR STORES. SOMETIMES THEY CLICK FROM THEIR DESK AND COME BY AND PICK UP IN A STORE. IN MINNEAPOLIS NOW, THEY'RE DRIVING UP AND WE'RE PUTTING IT IN THEIR TRUNK. AND OUR STORES, 1400 OF THEM, ARE SHIPPING FROM OUR STORE TO THAT GUEST. SO THERE'A A GREAT BALANCE BETWEEN WHAT WE DO IN OUR STORES AND HOW THAT ENABLES OUR DIGITAL FULFILLMENT.

REAGAN: IT'S STILL WORTH HAVING, THE 1,800 PLUS STORES EVEN IF THEY'RE SERVING AS MANY DISTRIBUTION CENTERS REALLY TO ENABLE ONLINE?

CORNELL: WELL, I GO BACK TO THE FACT, 30 MILLION SHOPPERS IN OUR STORES EVERY WEEK STORES ARE STILL IMPORTANT AS WE REMODEL STORES, AND WE HAVE REMODELED 110 THIS YEAR, WE'RE SEEING OUR COMPS INCREASE BY 2% TO 4% IN THOSE STORES. STORES ARE IMPORTANT. THE NEW STORES WE HAVE OPENED UP LIKE HAROLD SQUARE, NEW YORK - THE REACTION HAS BEEN AMAZING, AND WERE SEEING THAT ACROSS THE COUNTRY, WHETHER IT'S URBAN CENTERS OR ON COLLEGE CAMPUSES. SO STORES STILL MATTER. THEY'RE STILL GOING TO GENERATE THE MAJORITY OF RETAIL SALES FOR YEARS TO COME. WE WANT TO PROVIDE A GREAT IN-STORE EXPERIENCE.

REAGAN: EVEN THOUGH THE SALES IN STORES ARE FLAT?

CORNELL: WELL, BUT I EXPECT THEM TO GROW OVER TIME. AND AS WE REMODEL, THOSE STORES ARE SHOWING POSITIVE COMPS. SO, WHEN WE DELIVER A GREAT EXPERIENCE AND GREAT BRANDS, WE DELIVER GREAT VALUE AND GREAT SERVICE, AND WE'RE INVESTING IN OUR TEAM. AS YOU KNOW, WE HAVE MADE MAJOR INVESTMENTS IN OUR TEAM. MORE HOURS, A HIGHER WAGE RATE AND WE'VE HIRED OVER 100,000 SEASONAL TEAM MEMBERS. SO OUR STORES ARE SO VITAL TO OUR SUCCESS, AND I FEEL GREAT ABOUT THE WORK OUR STORE TEAMS ARE DOING.

REAGAN: I THINK KAYLA HAS A QUESTION.

KAYLA TAUSCHE: I DO, THANK YOU, COURTNEY, AND THANK YOU BRIAN FOR JOINING US. I'M CURIOUS IF YOU COULD COMMENT ON THE COMPETITION, BECAUSE LOOKING AT THE LAST YEAR, WALMART'S SHARES ARE UP ABOUT 27%, WHILE TARGET'S ARE DOWN ABOUT 23%. DO YOU CHALK THAT UP TO THEIR ACQUISITION STRATEGY, THEIR PRICING STRATEGY, AND HOW DOES TARGET PLAN TO CATCH UP?

CORNELL: WELL, WE'RE REALLY FOCUSED ON OUR STRATEGY. AND AS WE TALKED ABOUT DURING OUR EARNINGS CALL TODAY, WE'RE TAKING MARKET SHARE ACROSS MULTIPLE CATEGORIES. WE FELT GREAT ABOUT THE FACT THAT WE TOOK SHARE IN APPAREL, IN HOME, IN BEAUTY. WE'RE SEEING REALLY STRONG RESULTS ACROSS OUR PORTFOLIO SO WE THINK WE HAVE A SIGNIFICANT OPPORTUNITY TO GROW SHARE IN THE NUMBER OF DIFFERENT CATEGORIES WHERE WE PARTICIPATE. WE'RE EXCITED ABOUT OUR POSITION IN TOYS AS WE GO INTO THE HOLIDAYS, BUT WE REALLY LIKE THE WAY THE GUEST HAS RESPONDED TO OUR NEW BRANDS.AND WHETHER IT'S GOODFELLOW AND COMPANY IN MEN'S, PROJECT 62 IN HOME, SOME OF THE GREAT NEW THINGS THAT WE HAVE PLANNED FOR 2018. WE THINK THE COMBINATION OF GREAT BRANDS, OUR VALUE, REALLY SETS US APART. SO I THINK TARGET'S AT ITS BEST WHEN WE COMBINE BOTH SIDES OF OUR BRAND PROMISE. WE CAN DELIVER EXPECT MORE AND PAY LESS. WHEN WE BRING GREAT STYLE AND GREAT VALUE ON ESSENTIALS. WHEN WE CAN COMBINE BOTH OUR PHYSICAL EXPERIENCE AND A DIGITAL EXPERIENCE. AND WE'RE FOCUSED FOLKISHED ON EXECUTING THAT STRATEGY. AND RIGHT NOW, THE GUEST IS TELLING US IT'S WORKING. AND THEY'RE SHOPPING MORE OFTEN, THERE'S MORE TRAFFIC IN OUR STORES OUR DIGITAL PERFORMANCE IS OUTPACING THE INDUSTRY, AND THE REACTION TO OUR BRANDS AND OUR COMMITMENT TO VALUE, WELL, THE GUEST IS SAYING WE LOVE WHAT YOU'RE DOING, AND THEY'RE SHOPPING MORE OFTEN AT TARGET.

REAGAN: YOU MENTIONED THE BRANDS. THE BRANDS, OF COURSE, THAT ARE NATIVE TO TARGET YOU'VE LAUNCHED FOUR NEW ONES. ESSENTIALS ARE REALLY SOMETHING THAT DRIVES TRAFFIC. YOU'RE NOT BUYING CLOTHING AS MUCH AS YOU'RE BUYING SHAMPOO OR MAYBE LAUNDRY DETERGENT. THAT WAS DOWN IN THE QUARTER. SO WHAT ARE YOU DOING TO MAKE SURE THAT SHOPPERS ARE COMING IN MORE OFTEN FOR ESSENTIALS? THAT'S IMPORTANT TO TARGET.

CORNELL: YEAH. WELL, IT IS IMPORTANT. AND GOING BACK TO THE PLANS THAT WE LAID OUT EARLIER THIS YEAR, WE SAID WE'VE GOT TO MAKE SURE WE'RE INVESTING IN VALUE. AND WE STARTED WITH MANY OF THOSE ESSENTIAL CATEGORIES. SO WE HAVE INVESTED TO MAKE SURE WERE PRICED RIGHT EVERY DAY, THAT WE DELIVER THE KIND OF VALUE OUR GUEST IS LOOKING FOR IN THOSE ESSENTIAL CATEGORIES. AND WHILE THE COMPS WERE DOWN SLIGHTLY, UNITS WERE UP. AND THAT'S GROWING TRIPS FOR US. SO A BIG PART OF THAT 1.4% TRAFFIC INCREASE IS THE FACT THAT THAT VALUE MESSAGE, THE FACT THAT THE GUEST KNOWS WE'RE PRICED RIGHT EVERY DAY, WELL, THAT'S DRIVING TRIPS BACK INTO ESSENTIAL CATEGORIES, AND ONCE THEY'RE THERE, THEY'RE SHOPPING THE WHOLE STORE. SO I EXPECT COMPS TO IMPROVE OVER TIME. BUT RIGHT NOW, UNITS ARE GROWING IN THOSE CATEGORIES. WE'RE REGAINING MARKET SHARE, AND IT'S DRIVING TRIPS, AND THAT'S REALLY IMPORTANT TO OUR FUTURE.

REAGAN: ONE LAST ONE. THE HOLIDAY SEASON IS UPON US. BLACK FRIDAY IS NEXT WEEK. WHEN IT COMES TO MARKETING, TARGET IS ACTUALLY LEANING INTO A PARTNERSHIP WITH THE NFL. PAPA JOHNS HAS BLAMED THE NFL AND SOME OF THOSE PROTESTS FOR HURTING THEIR SALES. SO, DO YOU STILL FEEL GOOD ABOUT YOUR STRATEGY TO LEAN INTO ADVERTISING WITH THE NFL?

CORNELL: YEAH. I FEEL GREAT ABOUT OUR ENTIRE HOLIDAY PLAN. WE'VE GOT GREAT CREATIVE AND WERE GOING TO MAKE SURE WERE THERE WHERE THE CONSUMER IS WATCHING. SO WE HAVE A GREAT HOLIDAY CAMPAIGN. WE'RE GOING TO CONNECT WITH THOSE FAMILIES WHO LOVE TO SHOP AT TARGET. WE'LL DELIVER A GREAT HOLIDAY MESSAGE. WE WON'T BACK AWAY FROM VALUE DURING THE HOLIDAYS. AND WE'LL MAKE SURE THE GUEST KNOWS WE'RE A DESTINATION FOR GIFTING. SO I FEEL GREAT ABOUT OUR POSITION GOING INTO THE HOLIDAYS AND YOU KNOW, THE FUN STARTS IN THE NEXT COUPLE DAYS.

REAGAN: YEAH, THAT'S RIGHT. THANK YOU FOR HAVING US, BRIAN. HAPPY HOLIDAYS.

CORNELL: THANK YOU SAME TO YOU.

REAGAN: THANK YOU VERY MUCH. BRIAN CORNELL, CEO AND CHAIRMAN OF TARGET. DAVID, BACK OVER TO YOU.

For more information contact:

Jennifer Dauble
CNBC
t: 201.735.4721
m: 201.615.2787
e: jennifer.dauble@nbcuni.com

Emma Martin
CNBC
t: 201.735.4713
e: emma.martin@nbcuni.com

About CNBC:

With CNBC in the U.S., CNBC in Asia Pacific, CNBC in Europe, Middle East and Africa, and CNBC World, CNBC is the recognized world leader in business news and provides real-time financial market coverage and business information to more than 409 million homes worldwide, including more than 91 million households in the United States and Canada. CNBC also provides daily business updates to 400 million households across China. The network's 15 live hours a day of business programming in North America (weekdays from 4:00 a.m. - 7:00 p.m. ET) is produced at CNBC's global headquarters in Englewood Cliffs, N.J., and includes reports from CNBC News bureaus worldwide. CNBC at night features a mix of new reality programming, CNBC's highly successful series produced exclusively for CNBC and a number of distinctive in-house documentaries.

CNBC also has a vast portfolio of digital products which deliver real-time financial market news and information across a variety of platforms including: CNBC.com; CNBC PRO, the premium, integrated desktop/mobile service that provides live access to CNBC programming, exclusive video content and global market data and analysis; a suite of CNBC mobile products including the CNBC Apps for iOS, Android and Windows devices; and additional products such as the CNBC App for the Apple Watch and Apple TV.

Members of the media can receive more information about CNBC and its programming on the NBCUniversal Media Village Web site at http://www.nbcumv.com/programming/cnbc.

For more information about NBCUniversal, please visit http://www.NBCUniversal.com.