Target announced on Thursday it will reduce its corporate workforce by 1,800 positions as the retailer aims to resume growth following four years of nearly flat sales.
This represents the retailer’s first substantial round of job cuts in a decade. The layoffs were revealed in a memo distributed by Target’s incoming CEO Michael Fiddelke to staff at its headquarters.
The positions being eliminated include about 1,000 job cuts and roughly 800 roles that will remain vacant, according to a spokesperson for the company. Collectively, this signifies an approximate 8% reduction in Target’s corporate workforce, as stated in the memo. Affected individuals will be informed on Tuesday.
The retailer revealed these reductions as it approaches a transition in leadership.
In August, Target appointed Fiddelke, its current COO and former CFO, to succeed longtime leader Brian Cornell. He will assume his new role on February 1.
Fiddelke has also managed the Enterprise Acceleration Office, a project launched in May, that sought to streamline operations, leverage technology in innovative ways, and expedite Target’s growth.
Target has been grappling with declining sales, attempting to recover from a decrease in store traffic, inventory issues, and negative customer feedback. The company has anticipated a drop in annual sales for this year.
Its stock has decreased by 65% since reaching an all-time high in late 2021.
When compared to competitors in retail, Target relies less on grocery and essential item sales, making its operations more susceptible to economic fluctuations and consumer sentiment. Approximately half of Target’s revenue comes from non-essential items, as opposed to about 40% at Walmart, based on GlobalData Retail estimates.
Due to this and other company-specific challenges, Target’s sales patterns and stock performance have sharply diverged from its rivals. Walmart’s shares have risen approximately 123% in the past five years, while Target’s have declined by 41% in the same timeframe.
In a memo sent Thursday to Target’s headquarters employees, Fiddelke mentioned that the workforce reductions would aid in implementing necessary changes.
“The reality is, the complexity we’ve built over the years has been hindering our progress,” he stated in the memo. “Excessive layers and duplicated work have delayed decision-making, making it challenging to actualize ideas.”
He acknowledged the difficulty of these cuts but emphasized that “it is a crucial step towards shaping the future of Target and fostering the progress and growth we aspire to achieve.”
Target employees impacted by the layoffs will receive compensation and benefits until January 3, along with severance packages, according to the company spokesperson. No positions within stores or Target’s supply chain were affected by the layoffs, the spokesperson confirmed.
View the complete memo from Fiddelke:
Team,
This spring, we initiated our enterprise acceleration initiatives with a clear objective: to enhance our speed and simplify our operational processes to fuel Target’s next phase of growth. The fact is, the complexities we’ve established over time have been a barrier to our capabilities. Too many layers and redundant tasks have impeded decisions, complicating the realization of ideas.
On Tuesday, we will unveil adjustments to our headquarters structure as a significant measure in expediting our operations. This involves the elimination of roughly 1,800 non-field roles — around 8% of our global HQ workforce. As we implement these adjustments, I’m requesting all U.S. HQ team members to work remotely next week. Target teams in India and our other global divisions will continue their regular in-office routines.
Making decisions that influence our team is among the most critical actions we undertake, and we approach them with great care. I fully understand the serious implications this has for our team, and it will be challenging. Nevertheless, it is a necessary step towards creating the future of Target and facilitating the progress and growth we collectively wish to see.
Revising our framework is just one segment of the work ahead. We will also need to cultivate new behaviors and refine priorities that reinforce our retail leadership in style and design, enabling quicker execution to achieve:
- Leadership with authoritative merchandising;
- Enhancement of the guest experience with every interaction; and
- Accelerated technology to empower our team and delight our guests.
These combined changes will set our company on a path to becoming more robust, quicker, and better equipped to serve guests and communities effectively for many years ahead.
Michael
