Target Reportedly Planning To Cut Thousands Of Jobs
MINNEAPOLIS (WCCO/AP) -- Target Corp. announced Tuesday it will be eliminating several thousand positions over the next two years.
Company officials said many of those jobs will be at Target's corporate headquarters in Minneapolis. The cuts are part of a dramatic restricting plan to get the company back on track after it lost $2.5 billion in the fourth quarter of last year.
In a presentation to shareholders in New York, top executives stressed the company had lost its way and was caught flat footed as competitors moved more quickly to take advantage of the increasing shift to online shopping and mobile marketing.
Target's new goal is to become more agile to compete in an increasingly competitive landscape.
CEO Brian Cornell didn't mention the coming layoffs in Tuesday's presentation. However, when he promised that Target would cut expenses by $2 billion over the next two years, the writing was on the wall.
"Simplification, cutting complexity at headquarters, will make us more competitive," Cornell said.
He took over the helm last August. Cornell's current mission is to reclaim the dicount retailer's image as a purveyor of cheap chic fashion merchandise.
Cornell said that regaining a competitive edge would begin with cost cutting measures. He said the company will save $2 billion from the corporate restructuring, and that the money saved would be reinvested in growth and making the company more profitable for shareholders.
This news comes after the rockiest year in the company's history. In December of 2013, Target announced a massive data breach affecting 40 million of its customers.
Last month, the company announced the closing of all 133 of its Canadian stores. With that came the slashing of 350 jobs in the Twin Cities.
The discount retailer was only in Canada for two years, but the company lost $5 billion in the venture and didn't expect to make a profit until 2021.
Now, Target's new emphasis is expected to be on rolling out Target Express Stores like the one in Dinkytown, which is a fifth of the size of Target's smallest big box stores. Additionally, shipping from individual stores will be a new emphasis.
Company executives also promised that Target would recapture its role as fashion leader.
"We lost our edge," said Kathryn Tesija, the company's executive vice president. "There are lots of reasons why this happened, but no excuses. Let's talk about what we're doing to get back on top."
During the presentation, officials made it clear during that final decisions have not been made in regards to the corporate restructuring. One of the slides during the presentation read: "Nothing is sacred. Everything is on the table."
Dave Brennan is co-director of the institute for retailing excellence at the University of St. Thomas. He says the layoffs cut down the time it takes to make company-wide decisions.
"You end up being able to make those decisions quicker, in a matter of days or weeks rather than in months and months," Brennan said. "You got to develop that store traffic. If you don't get the store traffic, you're not going to get the sales."
Brennan says he thinks the layoffs will help by cutting roughly $1.5 billion from the expense budget. But he says the key for Target bouncing back will be putting the company's slogan, "Expect More, Pay Less," back in the formula.
Shortly following the layoff announcement, Target's stock rebounded. It had been down but closed up 4 percent over Monday.
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