Target cuts 1,800 corporate jobs, first major layoffs in a decade
Aim It said Thursday it would lay off 1,800 corporate employees as the retailer tries to return to growth after four years of roughly stagnant sales.
This marks the first major round of layoffs for the Minneapolis-based retailer in a decade. The layoffs were announced by Target’s new CEO, Michael Fiddelke, in a memo sent to employees at its headquarters.
The eliminated positions are a combination of about 1,000 employee layoffs and about 800 positions that will no longer be filled, a company spokesman said. Together, these represent a roughly 8% cut in Target’s corporate workforce, according to the statement. Affected employees will be notified on Tuesday.
The retailer announced the cuts as it approaches a leadership change.
In August, Target named Fiddelke, now its chief operating officer and former chief financial officer, as the successor to longtime leader Brian Cornell. He takes over on February 1.
Fiddelke also oversaw the Office of Corporate Acceleration, which was announced in May and sought ways to simplify company operations, use technology in new ways and accelerate Target’s growth.
Target is struggling with a decline in 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.
Its shares are down 65% since their all-time high in late 2021.
Compared to its retail competitors, Target derives less of its overall sales from groceries and other necessities; This can make its business more vulnerable to ups and downs in the economy and consumer sentiment. About half of Target’s sales come from discretionary items, compared to just 40% at Walmart, according to estimates from GlobalData Retail.
As a result of this and other company-specific challenges, Target’s sales trends and inventory performance have diverged sharply from its competitors. Walmart’s shares are up nearly 123% over the past five years, compared to Target’s 41% decline over the same period.
In a memo sent to employees at Target’s headquarters on Thursday, Fiddelke said the employee cuts will help Target make immediate changes.
“The truth is that the complexity we have created over time is holding us back,” he said in the memo. “Too many layers and overlapping work slowed down decisions and made it difficult to implement ideas.”
He said the cuts were difficult but “a necessary step to build Target’s future and deliver the progress and growth we all want to see.”
Target employees affected by the layoffs will receive salaries and benefits through Jan. 3 in addition to their severance packages, according to a company spokesperson. No roles within the stores or Target’s supply chain were affected by the outages, a company spokesperson said.
Read the full note from Fiddelke:
Set,
This spring, we launched our corporate acceleration effort with a clear goal: to move faster and simplify the way we work to drive Target’s next phase of growth. The truth is that the complexity we create over time is holding us back. Too many layers and overlapping work slowed down decisions and made it difficult to implement ideas.
On Tuesday, we will share changes to our headquarters structure, an important step in accelerating the way we work. This includes eliminating approximately 1,800 offsite roles (approximately 8% of our global HQ team). As we make these changes, I ask everyone: US Headquarters team members will work from home next week. Target in India and our other global teams will follow their in-office routines.
Decisions that affect our team are the most important decisions we make, and we never take them lightly. I know the real impact this will have on our team and it will be difficult. And this is a necessary step in building the future of Target and delivering the progress and growth we all want to see.
Adjusting our structure is part of the work ahead. It will also require new behaviors and sharper priorities that will strengthen our retail leadership in style and design and enable faster execution; like this:
- Leader with commercial sales authority;
- Improve the guest experience with every interaction; And
- Accelerate technology to enable our team and delight our guests.
Taken together, these changes pave the way for our company to be stronger, faster and better positioned to serve guests and communities for years to come.
Michael
