The following is the unofficial transcript of a CNBC interview with Target CEO Brian Cornell from the CNBC Evolve Global Summit, which took place today, Thursday, November 2nd.

All references must be sourced to the CNBC Evolve Global Summit.

Becky Quick: Brian, thank you very much for joining us. It’s a pleasure to be here in the store. And a lot of people are wondering what’s happening with the economy right now. You’ve got a great vantage point. What do you see happening with the U.S. consumer?

Brian Cornell: Thanks for coming to a Target store today. It’s really great to sit here inside of a store and talk to you. You know, if we think about the US consumer and obviously, we look at the consumer trends, just about every week. You know, I’d start with the American consumer has been incredibly resilient. Really over the last few years. You think about pandemics, inflation at a 40 year high, some of the challenges from a geopolitical standpoint, but the consumer has been incredibly resilient. But as we talked to them today, we are seeing signs of caution. I think the most prevalent term we hear from consumers is they’re looking at their budgets really carefully right now. And while we’ve certainly seen inflation starting to decline, lots of progress on that front. When you look at the impact over the last few years in a category like food and beverage, those household essential items – you know, food and beverage inflation, and costs are up 25 to 30%. So those basic items you need every day to feed your family that are consuming a bigger portion of the consumers wallet, well, those prices are way up. And it’s certainly pressuring consumers in how they spend, how they budget how they plan their lives are influenced by that really sticky inflation. If you’re a young mom with a child, compared to pre pandemic, baby food, baby formula prices up 30%.

Quick: Wow.

Cornell: 30%. You know, I’ve heard you report during the pandemic, many Americans all while they added a pet to their family. Pet food pricing is up 20%. So you’re seeing the pressure of higher prices for those essential items really pressuring the wallet. And we see it in the consumer feedback. They’re on a budget. They’re more conscious right now, but they’re still trying to enjoy experiences. So they are saving for those great nights out with friends. They still want to see family. They’re planning for vacations, but they’re managing that budget really carefully. And it’s certainly pressuring discretionary spending.

Quick: But when we started this conversation, you said the American consumer is very healthy. Let’s double click and dig down into that itself. Where is the American consumer really cutting back? Are they not going to buy toys for their kids this Christmas? Do you have less inventory for that? Do you have less inventory when it comes to just apparel or something along those lines? Where are you trying to play it safe?

Cornell: The term I use is resilient. I think they have shown great adaptability. I mean to think about what Americans went through during 2020 and 2021, how they’ve dealt with these incredible increases in costs, how they’re adjusting each and every day. I think they’ve shown adaptability and resilience. And again, as we think about where they are today, we’re gonna lean into categories like food and beverage, make sure we’ve got the great household essentials that are still very engaged in categories like beauty, and we’ll dial up our partnership with Ulta Beauty during a time like this. And we’ll be more thoughtful in managing inventory and discretionary categories.

Quick: So I said a healthy consumer. You didn’t – you said no, resilient. So you wouldn’t call the consumer healthy at this point.

Cornell: Well, they’re still spending. And part of that spending is driven by higher costs. But I think they’ve been optimistic. They’ve been adaptable. They’ve been agile. And we’ll see how that plays out during the holiday season.

Quick: What happens with higher interest rates, too? I mean, you look at things like a credit card. Consumers are now paying north of 20% on the interest they pay on their credit cards. It’s really tough. If you’re looking for a home to buy, if you’re not already locked into a mortgage, you’re gonna be paying above 8%. What does that mean? And do you see that in the stores right now?

Cornell: And that’s the caution we see flashing right now. So you talked about it. A lot of time is spent talking about interest rates going from 6 to 7 and now 8%. But if you’re using your credit card, you’re paying between 25 and 30%. Student loans are going to be repaid. Well, for the average consumer that might be somewhere between $250 and $450 a month they’ve got to pay back. So that’s the caution we’re seeing right now, and as consumers think about the balance of the year and going into 2024, how do they manage their budgets? And I think we’ll see them spending much more carefully.

Quick: So if you have a message to the Federal Reserve, who is looking to any and everybody to try and get data points about where we stand, have they done enough to raise rates to fight inflation? Is it – right now they seem to be waiting and looking around. What would you say from your position as a CEO and what you’ve seen?

Cornell: Yeah, we’ve really encouraged them to pause and look deeply into the numbers for the things we’ve just talked about. Making sure we’re not just looking at overall retail spending, but how’s the consumer spending? What are the challenges they’re facing? You know, we’ve seen their wallets rotate from discretionary items, back to experience and those household essentials and food and beverage that they need each and every day to take care of their family. So I think we’ve got to watch it really carefully, but with rising interest rates, and consumers thinking about those college payments they might be making in the future, I think we’ve got to watch it really carefully. Again, I think the Fed’s made tremendous progress in controlling inflation, but the lingering effects when I tell you food and beverage prices is up 25% or baby formula and baby food up 30% or that dog that you now love that you purchased during the pandemic and brought into your family, it costs you 20% more. Those are real pressures that are here to stay. And I think we want to watch how the consumer reacts to that really carefully.

Quick: Let’s talk about something that you have been on the forefront – theft, when it comes to the stores. You can call this shrinkage. You can call it whatever it is, but what it really is is organized criminal theft rings that are coming through. This is affecting every retailer. I think it was $112 billion that it was assumed to have cost –

Cornell: That’s the number.

Quick: — retail overall last year. But you’ve been I think the most vocal critic of what’s happening and saying that something needs to be done. We walk around the stores and you’ll see that there are now signs that say you can’t check out more than 10 items. You see some items that are locked behind glass and you have to wave your hand over to bring someone over to come get things open. You’ve taken a lot of steps to combat this. But where does the problem stand right now?

Cornell: Well, one Becky, we felt the need to use our voice to elevate awareness around this topic at both the national level, at the state level and the local level. And sitting here today, one, I feel really good about the progress that’s being made. Big thanks to Matt Shay at NRF, Brian Dodge at RILA. We’ve elevated the conversation. And I think we’re starting to see real progress. The INFORM Act, which was passed earlier this year, will make it much more difficult for these groups to monetize the goods that they’re stealing by putting more focus on identifying yourself before you can sell in the marketplace. That’s going to have an impact.

Quick: On a marketplace like an Amazon or a Facebook marketplace. Some of the places where basically fenced items, you know, stolen items are getting sold.

Cornell: That’s certainly what’s happening. But we’re also seeing really good support from the Homeland Security, the Secretary there. Very engaged in this topic.

Quick: What do they have to do with it?

Cornell: Well, they’re trying to make sure that they’re working across borders and using their agents to make sure they’re engaged and understanding who these groups are and whether they’re operating in New York, in New Jersey, in Connecticut, understanding how these groups are being mobilized.

Quick: Meaning working across state borders?

Cornell: Moving across state borders. We’re really pleased with how some of the local DAs have responded. Our teams and other retail teams have actually been walking stores with local DAs to make sure they better understand the challenges we’re facing.

Quick: DAs who weren’t necessarily prosecuting some of these crimes before or how much –

Cornell: In the past.

Quick: So this is left up to them to say you’ve got to prosecute these things?

Cornell: And make sure they understand the challenge. So when I started talking about this, we certainly talked about the overall financial impact. And you use the latest NRF number. It is a significant issue. But beyond the financial impact, I think there’s a societal impact here. So, you look at certain cities where stores have been closing, those jobs go away. The tax dollars are gone. But importantly, that local consumer doesn’t have access to the goods that they need. So that impacts everyone in that community. And I think as we’ve educated at the federal, state and local level, here’s the true impact. Yes, it’s a financial issue. There’s also a safety issue for our teams and the shoppers who are in a retail store when these gangs come in. But we’re building awareness. We’re starting to see some progress. There’s much more engagement right now. And I think we’re going to start seeing some very positive things that will happen over the next few years, but we had to use our voice to build awareness and really make sure everyone understood the challenges that we’re facing.

Quick: I mean, it’s not just your voice. You’ve taken action. And I realize you’re closing and opening stores all the time, but you made a move earlier this year to say that you were gonna close I think it was nine stores in urban areas –

Cornell: That’s correct.

Quick: — to say we’re closing these stores because we can’t deal with the shoplifting and the theft that’s going on here and we don’t feel like it’s a safe place for our employees. That was a move you said you didn’t want to make, but you were very vocal about doing it at the time and picking those stores. Why those stores? What happened there?

Cornell: Well, they were stores where we had made big investments in additional asset protection, working with third party security, we had used other devices to try to control theft. But we closed those stores because we deemed it wasn’t safe for our teams to continue to operate in those environments. And it’s really hard to make a decision to close the store. We like to open stores, we will open up 20 new stores this year. We like to be opening stores and expanding our presence. But when we’re not seeing the progress, when other stores are closing around us and our teams don’t feel safe, we had no choice but to say these are stores we’re going to close and we’re going to make sure we highlight the reasons why. But we don’t have any plans to close additional stores this year. And I’m hopeful with the growing awareness and support that we’re getting at the federal, state and local level, we’re going to start to see these organized crime rings start to slow down and realize that their eyes now are being placed upon them.

Quick: Brian, let’s talk about an issue that we have not discussed in an interview since the backlash that came through following the Pride activities – and that was what was happening in the store from a merchandising perspective, from a messaging perspective. There was a huge backlash against Target. What happened? Can you lay it out because you and I haven’t had a real conversation about this yet.

Cornell: Sure. Well, why don’t we step back? So this is my 10th holiday season at Target. You and I have been talking almost every quarter during those 10 years and I’ve seen natural disasters, we’ve seen the impact of Covid leading into the pandemic, some of the violence that took place after George Floyd’s murder. But I would tell you, Becky, what I saw back in May is the first time since I’ve been in this job where I had store team members saying it’s not safe to come to work.

Quick: What was happening to them?

Cornell: Very aggressive behavior at store level, lots of threats, product being destroyed, point of sale being disrupted. And when we started to hear that, we knew we had to take action. We had to prioritize the safety of our teams. And I knew personally, this was not going to be well received. But we had to prioritize the safety of the team. And we made some changes. The location of the product, we curated the assortment, we addressed some of the products that were getting the most attention.

Quick: When you say safety of the team and aggressive behavior, what were some examples of this? What did – these are people who did not like that you had Pride merchandise that was out and they came in and they said what?

Cornell: Well, they were very, again, aggressive with our team members.

Quick: Doing what? Yelling at them?

Cornell: Personally threatening them. Yelling at them. They threatened to like product on fire.

Quick: In the store.

Cornell: In the store. So, very aggressive behavior. We’ve been celebrating heritage moments, like Pride, for over a decade now. We’ve never seen that kind of response. So we had to step back and say all right, we’ve got to take action.

Quick: What was different this time? What do you think sparked that sort of a reaction?

Cornell: You know, I think there’s lots of different reasons and we’re going to spend a lot of time – we have spent a lot of time kind of listening and understanding some of the issues – and make sure as we go forward, we make the appropriate changes.

Quick: Well, let me just tell you from the outside for somebody who was not here. People said look, there are bathing suits that are transgender bathing suits that are being targeted and marketed to kids. There is a guy who you’re working with a designer who, you know, I don’t know, was a devil worshiper with some of the things. What did you find – what would you say back to some of those criticisms?

Cornell: Well, I think you and I both know, those weren’t true. But in the moment, we said the best thing for us to do is address the issue, we can’t combat each and every statement that’s being made, and do the right thing for our team, take the learning as we go forward. But it was a difficult time. And some of those things you pointed out, we knew were not true. But in the environment, we said look, let’s focus on de-escalating the issue, taking care of our team, celebrating the moment and take the learning as we go forward. And we talked during a recent earnings call, we’ll manage these moments very differently. These heritage moments, whether it’s Pride or Hispanic heritage or Black history, we’ll time them differently.

Quick: Was their different marketing? Was their different placement of these things? I’m just trying to figure out why Target was targeted, because there’s a lot of places that would have pointed to Gay Pride Month and were doing things. Why do you think you guys – you and Bud Light were the two brands that got really smacked over the head.

Cornell: Yeah. I think there were a couple of factors. One, we set the presentation much earlier than everyone else.

Quick: Meaning stuff was out on the store.

Cornell: Yeah. Early in May versus June 1. So we were way ahead of the industry. It was the first thing you saw when you walked into our store. So it was very prominent. And I think those two factors coming together – being early, being prominent in an environment where people had points of view they wanted to express, we were the front of that. So as we go forward, we’ll time it differently. Next year, you’ll see Pride on June 1. It’s not gonna be the first thing you see in our store, but we’ll present it appropriately. We’ll curate our assortment much more carefully and we’ll probably design most of it ourselves. So we’ll take that learning and bring it forward and make sure Target continues to be that happy place for our guests.

Quick: Now, let me say you first had this backlash from people who didn’t like that merchandise being there and threats to your team members.

Cornell: Sure.

Quick: Which by the way, sometimes are kids making $15, $16, $17 an hour.

Cornell: Yes they are.

Quick: Threats to your team members and I understand that. You took the step to say okay, we’re going to try and defuse this. And then you got attacked by the other side. You got caught in the middle of a culture war where people said hey, you’re not defending us. You’re leaving us to be the ones who have to be out here and you’re stepping back and not defending the Pride movement. What do you say to those criticisms? And I think some of the bomb threats that came into the stores came from people who were mad because they wanted you standing pat.

Cornell: Yeah. Well, I’m not sure who was making those threats at the end, but I’ll go back to we had to do the right thing for that team. And you talked to that. A lot of those team members might have been high school and college students. I mean, you’re a reporter, you’re also a mom and a spouse. If your son or daughter came home from work and said, “mom I was threatened today” and the next day said “somebody was really aggressive and said they’re going to come back and light product on fire.” What would you want the Target CEO to do?

Quick: Make sure my kid wasn’t in trouble.

Cornell: And that’s exactly what we did. And I said, you know, I’ve had 450,000 team members, I don’t know all of them, but I care for each one to make sure that they feel appreciated at Target. And when we saw those threats, I knew it wasn’t going to be popular and we might be under attack. But I had to prioritize the safety of those team members, those sons and daughters and husbands and wives that work for us and make sure I moved them out of harm’s way. And as soon as we made the changes, the threats went away. So there are no regrets. It was a tough decision, a lot of sleepless nights. Not one of the moments that – you know, I’m going to reflect on and say we want to ever do this again. We’re going to take that learning. But I know our team appreciated it and appreciated the fact that we had the courage to make the right decisions on their behalf. And I know their families also appreciated it.

Quick: Because you don’t want to be in the middle of a culture war I take it.

Cornell: No.

Quick: Brian let me just ask though, and I know you’re in a quiet period, you can’t say specifically, but Bud Light – we know that the sales have not come back to Budweiser for a lot of those things. Do you feel like you have weathered the storm and how much of the concern you see in consumer do you think is related to this? How much is that you know, it was a moment and we are through it?

Cornell: Yeah, one, I think it’s a moment and we’re through it. But if you look at our most recent results, and we talked about the fact there’s a lot of different variables, how consumers are spending, the tightening of their wallets, that change in discretionary spending. Last year, we were overlapping a lot of inventory actions, a lot of promotional actions. So it’s really hard to tease out the impact. But when we talk to guests, which we do all the time, if you and I got up right now and sort of walking around. There are guests shopping in this building that are gonna say I love Target. And Target is my happy place. And our focus is on making sure each time you shop, this is that happy place. You come in for great inspiration, ease, convenience, that great interaction with our teams. And that’s gonna be our focus going forward.

Quick: You came into Target in 2013, as you said 10 years ago, and it was to deal with a crisis at the moment to try and get through that. You’ve had a lot thrown your way in the time since then. The pandemic, I remember talking to you through that and thinking that this was the craziest thing that had ever happened in your career. This backlash that we just talked about. Where do you think you are in terms of managing these crises? How do you feel about things just from a leadership perspective? How do you kind of look back on all of this?

Cornell: Well, I think we always we listen and learn. You know, if you’re in retail, you’ve got to be a student of the consumer. You’ve got to be looking at trends. You’ve got to understand what the guest is looking for, what’s happening from a competitive standpoint, what’s happening in the economy. So, you know, sitting here today, while these have been challenging moments, you know, I think we’re a stronger organization than we’ve ever been. You think about the scale we’ve generated since the start of the pandemic, we were a $100 billion company, over $100 billion company. We’re still learning how to leverage that scale. We were one of the first to develop these omnichannel skills. You know, those drive up lanes that are in our parking lot. And we’re going to continue to make those investments. So you’ve got to kind of constantly be taking the learning, kind of listening, understanding how we make Target an even better company and continue to delight the guests that shop. Right now, if you go into our parking lot on your way out and decide to place an order, you can get your favorite cup of Starbucks coffee. And that was a byproduct of listening to the guests and said alright, here’s a way to make Target even better and delight me even more often. And while it’s early days, you know, we’re delivering 100,000 Starbucks orders a week. So how do we continue to make it easy, inspiring? If you walk the store, you’re gonna see lots of great new product, lots of affordability, teams that are really engaged that want to provide you with a great experience. So I think it’s always listening and learning, finding ways to make Target a better company, investing in our teams and our capability. So I’m constantly learning. I’m still a student. And we’re going to continue to make sure our organization continues to listen, learn and get better.

Quick: What’s your message to Wall Street? Because the stock has been under pressure if you look back for the year to date, if you look at the one year, it’s been a drop down since I think around $180, $181 February of last year, if you start running through some of these numbers. What do you say to Wall Street? Because you’ve dealt with the inventory situation, got that under control. We’re ready to go. You’ve had some other hurdles along the way. Now what? Now what’s the message? When I read analyst notes, they’re pretty cautious.

Cornell: Well, it starts with Becky, we’re playing the long game. And I think we’ve got a very unique strategy. We’ve got almost 2,000 great stores we run each and every day. We’ve got this unique set of fulfillment capabilities, whether it’s pickup or drive up or delivering right to your home. We are continuing to invest in our business. We’ve got 450,000 team members that are dedicated to providing great service. So we’re going to continue to play the long game, make the investments in our business. These cycles will change. I wish I could tell you when, but I know consumers are going to come back and start buying new apparel. They’re going to start investing in their home again. They’ll be looking for new kitchen appliances. They are going to buy toys during the holiday. And I think we’re so well positioned now as a $100 billion company that’s made big investments that, long term, I know that we’re gonna be one of the winners in retail.

Quick: Does the stock price frustrate you?

Cornell: Well, I look at it from time to time, probably every day. And I think it just shows there’s lots of upside, but we’ve got to prove our way there. Quarter after quarter, consistently executing, running our business. I think if we do those things and we take care of our team, we will be in a much better position12, 24 months from now.

Quick: Being at the top as a CEO can probably be a pretty lonely position. Do you have mentors who you reach out to? People that you kind of look to to seek advice from?

Cornell: I do. I will tell you, what’s really been satisfying for me this year, is the number of people who have reached out to me and said, you know, we’re there for you. We’re supporting you during a challenging time. We believe in Target, the strategy, the company. So I have people I reach out to, but this year I sent out a lot of thank you cards for people who just said boy, we are there to support you, we are behind you, the company, your team. And we know long term Target is gonna be a winner.

Quick: What’s the best holiday item on the floor here right now?

Cornell: Let’s go take a spin. That’s up to you to decide. We’ve got lots of favorites. Lots of new items. But for every guest, it’s a little different.

Quick: Brian, I want to thank you very much for joining us for the Evolve Global Summit this year. We really appreciate it.

Cornell: Thanks for having me.