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Target CEO Talks Transformation and Outlook for 2016

Target has been dedicated to transforming its business, revamping its supply chain and positioning the company for growth—and so far so good.

On Monday the Minneapolis-based retailer said it hired former Amazon executive Arthur Valdez to lead the company’s supply chain transformation—planning, distribution, transportation and all. And last week Target said fourth quarter earnings were up 1.9% thanks to traffic growth of 1.3%, and that digital sales soared 34 percent. For the full 2015, comparable sales were up 2.1%.

Speaking at the company’s annual investment community meeting Wednesday, Target CEO Brian Cornell said the focus for the year ahead will be staying guest-centric and including more personalized offers and hassle-free experiences.

“I’m really proud of the great work by our team in 2015 to drive significant progress on the strategic priorities we laid out a year ago,” Cornell said in an interview on Target’s website. “Guests are telling us with their feet and their clicks that we’re focusing on the right things. Traffic has been up for five straight quarters.”

Target wants shopping to be simple for its guests, and according to Cornell, the first step in providing that is by “getting the fundamentals right” in the supply chain, in stores and with technology.

Among those fundamentals is understanding what really causes persistent out-of-stocks. To find out, Target had a dedicated team dig into the problem and uncover and implement what the company called “simple, sustainable changes.” Those changes helped the company end 2015 with out-of-stocks 40 percent lower than the year before, Cornell said.

But innovation won’t be relegated to the back burner just because the company is focused on fundamentals.

“Meeting our guests’ needs means building a strong foundation while also thinking about the possibilities for the future,” Cornell said. “Exploring opportunities to learn and innovate beyond our core businesses and fueling a culture of curiosity are critically important to our future.”

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This year, Target will continue to invest in its signature Style, Baby, Kids and Wellness categories, improving in areas like fit, quality and natural and organic food offerings. The Kids department will get two new brands thanks to input from parents about how they shop for their kids, and Baby departments in select stores will see a new connected nursery area to make navigating the section simpler for new parents.

“Our focus in 2016 and beyond is on providing a seamless, reliable and enjoyable guest experience each and every time,” Cornell said. “We know we have a lot of work ahead, but our teams are up to the challenge. Target’s leaders are engaged, the team is energized and our guest—as always—is at the center of everything we do.”