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5 Reasons Target���s New CEO Is Boring Chic

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New York ( TheStreet) -- Target  has announced a new chairman and chief executive officer just weeks before its Aug. 20 second-quarter earnings release.

Although the timing of the decision will raise concern on the performance of the business this summer, the actual candidate looks to be the right person at the right time for the job.

Thursday, Target announced that it has tapped former Sam's Club (a division of Walmart ) President and Chief Executive Officer Brian Cornell as its first outside leader of the company. Effective Aug. 12, eight days before Target's second-quarter earnings release, Cornell takes over the reins from interim chief executive officer John Mulligan, who has led the retailer since the departure of Gregg Steinhafel on May 5. Target made no mention regarding Mulligan's status with the company following the arrival of Cornell in August.

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Cornell joins Target, which my firm Belus Capital Advisors rates a sell due to material risks from the Canadian business, from a recent two-year plus stint at PepsiCo , where he was in charge of the Americas Food division.

Although not the proverbial sexy choice with a strong background in the apparel industry, Cornell is a solid appointment for this stage in the history of the Minneapolis-based retailer. Here are five reasons why.

Battle tested: Cornell was announced to his post at Sam's Club literally at the bottom of the stock market on March 9, 2009. Cornell witnessed firsthand how consumers increasingly demanded value at every corner of a retail store. Operating in that climate gives Cornell unique insight as to what is required to reignite Target's weak store traffic and stagnant top and bottom lines.  Traffic to Target stores, per Bloomberg, last increased (2%) in the first quarter of 2012, and has declined in six consecutive quarters.

Proven results-getter: From the year-ended Jan. 31, 2009 to Jan. 31, 2012, which covers Cornell's tenure with Sam's Club, the warehouse club operator added $6.9 billion in total revenue, according to Bloomberg data. Operating income went to $1.8 billion from $1.6 billion, giving the division relatively flat operating profit margins.

Cornell left Sam's Club on a high note, with same-store sales increasing 8.8% for the year-ended January 31, 2012, up from a 3.5% growth rate in 2011 and a 0.4% drop the year before, per Bloomberg. When Cornell exited, Sam's Club had $53 billion in annual revenue. Target had $35 billion in annual revenue in 2013.

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Cornell's ability to manage a business larger than Target may partially explain why the company gave him dual responsibilities as chairman and chief executive officer.

Understands the consumer: Known for walking stores to understand the consumer, Cornell has shown he is capable of connecting with different income segments of the U.S. population. At Sam's Club, Cornell expanded the fresh food and health and wellness offerings to attract a higher income consumer, one whose spending has always been vital to the financial success of Target. Sam's Club was the first warehouse chain amongst Costco and BJ's Wholesale Club to offer Wi-Fi in all of its stores.