Target makeover continues as its No. 2 executive leaves

Kathee Tesija, who rose from an entry-level analyst job to become the chief shaper of Target Corp.'s style and decider of all the things it sells, is leaving in the highest-level executive change since a new leader arrived 10 months ago.

Tesija is ending a 29-year career with the Minneapolis-based retailer, the past seven as executive vice president for merchandising and its de facto No. 2 executive.

The company portrayed her departure as amicable and said she will continue to serve as a consultant and be paid her salary, which was $950,000 last year, along with bonus and other incentives until next spring. After that, she will qualify for severance depending on whether she accepts certain restrictions, including a length of time in which she won't work for competitors.

For the company, her departure is a sign that the remaking of Target by new Chief Executive Brian Cornell has reached to leadership level. For Tesija, 52, the change opens the door to opportunities across the retail industry.

"She's had a very good career at Target, and this is not an unusual move" for a new leader to reshape the executive suite, said Elaine Hughes, founder and chief of E.A. Hughes, a New York executive search firm that specializes in the retail industry.

In a statement, Cornell said Tesija had been "instrumental" in Target's growth and shaping its image with consumers.

"Over the past several months, Kathee and I have had many discussions about the business and together have decided that it is the right time for her to transition to an advisory role," Cornell said. "In this role, she will spend the next several months contributing to key enterprise initiatives and ensuring a smooth transition of her responsibilities."

After arriving last August, Cornell this year has undertaken a number of sweeping changes, including closing the company's money-losing Canadian operations and laying off more than 2,000 people at its Twin Cities corporate offices, about 15 percent of its local head count.

He has sold or closed several businesses that are not considered important to the operations of its 1,800 U.S. stores. Just last week, Target announced it would sell the pharmacy operations in its stores to CVS Health Corp.

Until now, the executive suite remained untouched except for the retirement of a chief technology officer.

Cornell himself brought up C-suite staffing in a meeting with investment analysts in New York in March. "I've been asked time and time again, do we have the right team in place, and I will tell you absolutely," he said then. "We've the right team in place, we're going to hold ourselves accountable, and we are going to focus on execution."

Even so, Tesija was considered vulnerable by some analysts and other observers of the company because she had been seen as a prospect for the CEO job, which Cornell won after Target directors ousted previous leader Gregg Steinhafel in May 2014. It's unknown if the Target board considered her during the transition, however.

Tesija has been widely viewed by employees as the keeper of the look and feel of Target stores and style sensibility. As its top merchandiser, she had the final call on what Target sold. In 2012, she also became responsible for managing Target's supply chain, which means keeping track of suppliers and the systems that monitor the arrival and sale of goods.

Tesija joined Target in 1986 as a merchandise analyst and later rose into leadership roles and was senior vice president of various divisions.

The company said she was unavailable for comment Thursday. She couldn't be reached otherwise.

Even amid rapid changes in the retail industry, most leaders of major retail firms come out of the merchandising background where Tesija spent her career, recruiters said.

"I would think there are any number of companies that would be very interested in discussing president and CEO roles with her," said Kirk Palmer, principal of Kirk Palmer Associates, a New York executive search firm that specializes in retail.

Target said it will consider internal and external candidates for Tesija's position. Hughes said Cornell's chief objective should be to find an executive who is not trapped by retail tradition.

She noted that Kohl's Corp. earlier this month tapped Michelle Gass, a former Starbucks executive with less than two years at the Wisconsin-based retailer, to be its new chief merchandiser.

"As an industry, we are moving very fast," Hughes said. "He's got to have people around him who think in that way."

Staff writer Kavita Kumar contributed to this report.

Evan Ramstad • 612-673-4241