Target cutting 475 jobs worldwidePublished 8:27pm Wednesday, January 22, 2014
Target Corp. laid off 475 corporate employees Wednesday as it struggles with disappointing sales, Canadian woes and aftershocks from its massive data breach.
It has also eliminated 700 open positions, which together with the layoffs represent about 8 percent of its Twin Cities corporate workforce. Target wouldn’t disclose how many cuts came at its Minneapolis headquarters.
But unofficial word from employees indicated that Target Technology Services bore the deepest cuts. Another 45 marketing employees were also said to be dismissed. Others layoffs were reported in finance.
Target has roughly 10,000 corporate employees in downtown Minneapolis, several thousand more scattered around the Twin Cities, and it supports many thousands who cluster nearby.
It all underscored worries about Minnesota’s best-known corporation, a giant that lifted the Twin Cities into a retailing and marketing powerhouse, but now seems to be faltering.
“Today we informed our team that approximately 475 positions are being eliminated worldwide,” Target said in a statement. “We believe these decisions, while difficult, are the right actions as we continue to focus on transforming our business.”
The Target statement continued, “We will continue to invest in key business areas to strengthen our ability to compete and thrive well into the future.”
Some of the jobs eliminated will be replaced by contractors or sent overseas, including to India, employees said.
The long-rumored layoffs began Wednesday morning, as employees were summoned to mandatory 15-minute private meetings.
They follow a series of troubles at the discount giant, which had stumbled even before hackers accessed private customer data on up to 110 million holiday shoppers. Many retailers struggled over the holidays, but Target faced unique troubles.
Three months ago, Target warned that it couldn’t meet its earlier promise of robust future growth. Along with its U.S. struggles, the discounter’s expansion last year into Canada — the largest in Target history — has been troubled and costly.
The company was hoping for a blockbuster holiday season, one that showcased its splashy new digital tools.
Instead, Target was victimized by a massive data breach that angered its customers, wounded its image, exposed it to immense costs, hurt its stock price and sent its shoppers elsewhere.
The 19-day security breach hit Target at the worst possible moment, between Thanksgiving and Christmas when stores are busiest. News of the breach became public one week before the last-minute Christmas rush.
Target spokeswoman Molly Snyder declined to say whether any Target executives were among those laid off Wednesday.
“I can’t speak to specific personnel,” Snyder said.
Wednesday’s layoffs are a special blow in the Twin Cities, where Target has reigned as the region’s most visible corporation, downtown Minneapolis’ largest corporate employer and heir to the Dayton’s retail legacy.
It remains such a magnet and market for advertising, digital and marketing professionals that insiders sum up its importance in a phrase: Target Feeds The World.
So Target’s troubles have been watched with increasing nervousness in the Twin Cities, where the company name and bulls-eye logo is featured on high-profile venues including the Twins baseball stadium, the basketball arena and a wing at the Minneapolis Institute of Arts.
For weeks, Target corporate employees have been bracing for bad news, especially after executives said in October that its long-term growth plan was faltering.
Instead, the company rolled out a Plan B, hoping to hits its profit goals through cost-cutting and stock buybacks. Analysts foresaw layoffs, and so did many Target corporate employees.
Now, in the wake of the breach, some analysts think Target will stop buying back its stock in order to conserve cash.Target could make even deeper cuts to reach its profit goals — and there are fears of more layoffs to come. But some analysts see that as a risky strategy, given the potential costs of the security breach.
“We think that Target has the opportunity to reset expectations both internally and externally and should use this opportunity to do so,” Credit Suisse analysts wrote earlier this month. “The challenges experienced in 2013 are not likely to abate in 2014, and may have become even more perplexing with the need to regain the trust of the Target guest.”
Wednesday’s layoffs weren’t Target’s first. In October the company laid off 150 corporate employees, mostly at its downtown headquarters. A company spokeswoman said that first wave was “about Target’s business evolution” and “meeting the increasing demands of our digital-savvy guests.”
Like many brick-and-mortar retailers, Target has tried to cope with an ever-more digital world, as online becomes crucial to the company’s future.
The company has made some inroads in the digital realm, but there were also stumbles, most famously its system meltdown when the Missoni designer collection was unveiled in 2011. Yet until the data breach, Target’s online performance had greatly improved, and the company refocused on a more digital future.
Target has $74 billion in annual sales, stores in 49 states, and its bulls-eye brand is among the most-recognized icons in the nation. It ranks No. 36 on the Fortune 500 list of America’s corporate giants.
The company has stores only in the United States and Canada, but it also has a technology office in Bangalore, India — named for Target CEO Gregg Steinhafel — which employs about 2,800 workers.
Target shares closed at a new 52-week low Wednesday, falling 0.4 percent or 22 cents, to $58.98.