Target is eliminating approximately 1,800 corporate positions, laying off 1,000 employees and not filling about 800 vacant positions.
The Minneapolis-based retailer has been experiencing a long period of declining sales and has lost some of the cache it held as a discounter with some style panache and merchandise innovation. The cuts represent 8 percent of Target’s corporate workforce of 22,000.
“We’ve announced changes to our corporate structure today in an effort to accelerate our strategy and return to growth,” a Target spokesman told WWD in an email. “It’s important to understand that we did not take these actions to save cost; adjusting our global headquarters structure is the first step in rewiring our organization to be agile and make faster decisions.”
Those impacted will continue receiving pay and benefits until Jan. 3, in addition to severance packages and other services and support, the spokesman indicated.
He added that no roles in stores or the supply chain are being impacted.
In a memo sent to employees, Target’s incoming chief executive officer, Michael Fiddelke, said: “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.”
Fiddelke added that Target will elaborate on the changes to the company’s corporate structure next week and requested that all U.S. corporate employees work from home next week. Target in India and other global teams will follow their in-office routines,” Fiddelke wrote.
In August, Fiddelke was named Target’s new CEO effective Feb. 1. Fiddelke, currently Target’s chief operating officer and a 20-year company veteran, will take over from Brian Cornell, who is transitioning into the role of executive chairman.
Fiddelke’s memo went on to say: “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,” concluded Fiddelke.
Neil Saunders, managing director of GlobalData, wrote Thursday, “While there is some truth in Target’s assertion that its job cuts are a consequence of simplification, they are also the result of a business that has been underperforming for a long time and has been operationally weak. The repeated failure to grow the top line in a meaningful way has eroded profitability, which in turn has left investors very dissatisfied.
“Cutting corporate jobs may help boost profit. However, the move alone does not solve all of Target’s ills — especially as investment is also needed on the shop floor to improve the customer experience,” Saunders said. “Target could, arguably, use some of the corporate savings to make such enhancements, but to do so it will need to manage the expectations of investors.
“Regardless of how the cost pie is cut, it also needs to be accompanied by a change of culture at Target,” he said. “Unfortunately, leadership has been in seeming denial about many of the challenges and has not been nearly open enough about them with either staff or stakeholders. That may change with new leadership, but it is a prerequisite for future success.”