Brian Cornell, CEO of PepsiCo Americas Foods, in an official PepsiCo photo. The Wall Street Journal reports that Cornell will step in as Target's new chief executive. Courtesy PepsiCo

Brian Cornell, a PepsiCo executive, will step in as Target's new chief executive, the company said Thursday. It is the first time Target has hired an outsider for the position.

Cornell, 55, served as CEO of PepsiCo Americas Foods. Prior to that, he'd been president and CEO of Sam's Club, a unit of Target rival Walmart. He has served on the board of directors of Medina, Minnesota-based Polaris Industries since 2012.

Observers say Cornell's broad retail experience and energy are what Target needs to regain its footing in a rapidly changing retail business where Target must compete not only with Walmart but with deep discounters on the street and online.

Former CEO Gregg Steinhafel stepped down in May. He was a 35-year veteran of the company who took over as CEO in 2008 during the depths of the Great Recession.

Target made headlines last year after a massive data breach of customers' credit and debit card information. Target had already been hurting financially because many U.S. consumers had been hesitant to spend. The company also stumbled badly in its expansion into Canada, racking up nearly $1 billion in operating losses last year that eroded the company's profits.

For its next leader, Target wanted a transformational leader, company spokeswoman Dustee Jenkins said.

"Brian is one of the very few executives who has served in an executive capacity for both mass and grocery retailing, as well as led a global consumer products company," Jenkins said. "We feel that global experience is incredibly important."

"While he was CEO of Sam's Club, they put up some very solid same-store sales," said Brian Yarbrough, an analyst with the investment firm Edward Jones. "I think when he went back to PepsiCo, most people thought he would succeed the current CEO and become the CEO of the entire corporation, but obviously the opportunity for Target came up."

Target stock fell nearly 3 percent in Thursday trading as the overall market declined.

Cornell is set to become Target's CEO on Aug. 12.

He'll earn a base salary at Target of $1.3 million but will also get some $19 million in Target shares to compensate for incentive awards he's leaving behind at PepsiCo, according to a Securities and Exchange Commission filing on Thursday.

Steinhafel earned $1.5 million in base salary last year, though his total compensation was $13 million in 2013 and more than $20 million in 2012, Target documents show. He also received a $16 million severance package after he was ousted in May.

Observers say Cornell fits well with the needs of the struggling Minneapolis retail giant.

"Brian's reputation is as a great marketer, so that will be helpful in what Target needs to do now in the U.S. business," said Jerry Storch, a former Target vice chairman who now runs his own firm, Storch Advisors.

"They've been flatlining it in the U.S. for some time," he added. "That's the core business and he has to work on that."

The most successful big box stores are straining to keep their business.

Earlier this year, Wal-Mart posted its fourth-straight quarterly sales decline in the U.S.

Retailers also face competition from surging super-discounters like the dollar stores. The Wall Street Journal reports Dollar Tree's takeover of Family Dollar on Monday helped push up the value of the nation's top three super-discounters by more than $2 billion this week.

Cornell doesn't bring obvious experience in what's called omni-channel retailing, a mix of brick and mortar and online sales that's expected to be a bigger and bigger share of retail.

"Target is far behind Walmart on the Internet today, and following farther behind every day," said Storch. "Target is kind of a bottom-half retailer on e-commerce."

Yarbough, however, said he's glad to see Target tap an outside to run the business.

"Hopefully, he keeps an open environment," he said, "and they can get creative like they used to be (to) what made the Target stores so interesting and people interested in shopping the stores."

Here are more details on Cornell's pay:

Refresh this page for updates