Target said on Thursday it’s cutting 1,800 corporate jobs as the retailer tries to get back to growth after four years of roughly stagnant sales.
It marks the first major round of layoffs in a decade for the Minneapolis-based retailer. It announced the layoffs in a memo sent by Target’s incoming CEO Michael Fiddelke to employees at its headquarters.
The eliminated roles are a combination of about 1,000 employee layoffs and about 800 positions that will no longer be filled, a company spokesman said. Together, they represent an approximately 8% cut to Target’s corporate workforce, according to the memo. Affected employees will be notified Tuesday.
The retailer announced the cuts as it nears a leadership change.
Target in August named Fiddelke, currently its chief operating officer and formerly chief financial officer, as the successor to longtime leader Brian Cornell. He takes the helm February 1.
Fiddelke has also overseen the Enterprise Acceleration Office, an effort announced in May, which looked for ways to simplify company operations, use technology in new ways and speed up Target’s growth.
Target has been fighting a sales slump, as it tries to rebound from declining store traffic, inventory troubles and customer backlash. The company has said it expects annual sales to decline this year.
Its shares have fallen by 65% since their all-time high in late 2021.
Compared to retail competitors, Target draws less of its overall sales from groceries and other necessities, which can make its business more vulnerable to the ups and downs of the economy and consumer sentiment. About half of Target’s sales come from discretionary items, compared to only 40% at Walmart, according to estimates from GlobalData Retail.
As a result of that and other company-specific challenges, Target’s sales trends and stock performance have diverged sharply from competitors. Shares of Walmart are up about 123% in the past five years, compared to Target’s decline of 41% during the same time period.
In a memo sent Thursday to employees at Target’s headquarters, Fiddelke said the employee cuts will help Target make urgent changes.
“The truth is, the complexity we’ve created over time has been holding us back,” he said in the memo. “Too many layers and overlapping work have slowed decisions, making it harder to bring ideas to life.”
He said the cuts are difficult, but “a necessary step in building the future of Target and enabling the progress and growth we all want to see.”
Target employees affected by the layoffs will receive pay and benefits until January 3, in addition to severance packages, according to a company spokesman. No roles in stores or in Target’s supply chain were impacted by the cuts, the company spokesman said.
Read the full memo from Fiddelke:
Team,
This spring, we launched our enterprise acceleration efforts with a clear ambition: to move faster and simplify how we work to drive Target’s next chapter of growth. The truth is, the complexity we’ve created over time has been holding us back. Too many layers and overlapping work have slowed decisions, making it harder to bring ideas to life.
On Tuesday, we’ll share changes to our headquarters structure as an important step in accelerating how we work. This includes eliminating about 1,800 non-field roles — about 8% of our global HQ team. As we make these changes, I’m asking all U.S. HQ team members to 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 significant ones we make, and we never make them lightly. I know the real impact this has on our team, and it will be difficult. And, it’s a necessary step in building the future of Target and enabling the progress and growth we all want to see.
Adjusting our structure is one part of the work ahead of us. It will also require new behaviors and sharper priorities that strengthen our retail leadership in style and design and enable faster execution so we can:
Lead with merchandising authority; Elevate the guest experience with every interaction; and Accelerate technology to enable our team and delight our guests.
Put together, these changes set the course for our company to be stronger, faster and better positioned to serve guests and communities for many years to come.
Michael
