target announced Thursday that it will cut 1,800 corporate jobs as the retailer looks to regain growth after four years of nearly stagnant sales.
This is the first major layoff in a decade for the Minneapolis-based retailer. Target’s incoming CEO Michael Fidelke announced the layoffs in a memo sent to employees at the company’s headquarters.
The positions being eliminated are a combination of approximately 1,000 employee layoffs and approximately 800 positions that will no longer be filled, a company spokesperson said. Together, these will result in a reduction in Target’s corporate workforce by approximately 8%, according to the memo. Affected employees will be notified on Tuesday.
The retailer announced job cuts as a leadership change approaches.
In August, Target named Fidelke, now chief operating officer and former chief financial officer, to replace longtime head Brian Cornell. He will take command on February 1st.
Mr. Fidelke also oversaw the Office of Enterprise Acceleration, announced in May to find ways to simplify company operations, use technology in new ways and accelerate Target’s growth.
Target is battling sluggish sales as it tries to recover from declining store traffic, inventory issues and customer backlash. The company said it expects annual sales to decline this year.
The company’s stock price has fallen 65% from its all-time high at the end of 2021.
Compared to its retail competitors, Target generates less sales from groceries and other staples, which can make its business more susceptible to ups and downs in the economy and consumer sentiment. About half of Target’s sales come from discretionary goods, compared to just 40% at Walmart, GlobalData Retail estimates.
As a result of this and other company-specific challenges, Target’s sales trends and stock price performance have diverged significantly from its competitors. Walmart’s stock has risen about 123% over the past five years, while Target’s stock has fallen 41% over the same period.
In a memo sent Thursday to employees at Target’s headquarters, Fidelke said the job cuts will help Target make urgent changes.
“The truth is that the complexities we have built over time have been holding us back,” he said in a note. “There are too many layers and duplication of effort, slowing down decision-making and making it difficult to turn ideas into reality.”
He said the layoffs were difficult but “a necessary step to build Target’s future and enable the progress and growth we all desire.”
In addition to severance pay, eligible employees affected by the layoffs will receive pay and benefits through Jan. 3, a company spokesperson said. Stores and roles in Target’s supply chain were not affected by the layoffs, a company spokesperson said.
Read Fidelke’s full memo.
team,
This spring, we launched our enterprise acceleration journey with a clear ambition to move faster and simplify the way we work to power Target’s next chapter of growth. The truth is, the complexities we have built over time are holding us back. Too many layers and duplication of effort slows decision-making and makes it difficult to turn ideas into reality.
On Tuesday, we’ll be sharing changes to our corporate structure as a key step in accelerating the way we work. This includes eliminating approximately 1,800 people in non-field roles, representing approximately 8% of our global headquarters team. As we make these changes, we are asking all members of our US headquarters team to work from home next week. Target in India and other global teams follow internal routines.
Decisions that affect our team are the most important decisions we make, and they are never made lightly. We know the real impact this will have on our team, but it’s going to be difficult. And this is a necessary step to building Target’s future and enabling the progress and growth we all want.
Adjusting our structures is part of the work ahead of us. It also requires new behaviors and clearer priorities that strengthen retail leadership in style and design and enable faster execution, enabling:
Leads with merchandising authority. Improve the guest experience with every interaction. Accelerate technology to enable your teams and delight your customers.
Collectively, these changes set the course for us to be stronger, faster and better positioned to serve our guests and communities for years to come.
michael
