Target’s promised layoffs are here at cost of $100 million
Target (TGT) told 1,700 unlucky workers in Minneapolis on Tuesday that they were out of a job as part of a previously announced round of cuts.
Last week, the discount retailer’s top executives unveiled a multi-year plan to Wall Street aimed at re-inventing its business and saving $2 billion in costs in the next two years, including the elimination of “several thousand” positions, primarily at its headquarters. The goal of the job cuts is to make the company a “much more agile, effective organization” by reducing the bureaucracy that has held Target back and made it slow to react to changes in customer behavior, notably the shift to online shopping in recent years.
In addition to the 1,700 job cuts—or which Target will incur a $100 million charge this quarter, according to a regulatory filing—the company also permanently closed 1,400 open jobs. (Target employs some 366,000 people in all.)
“While today’s news is difficult, it’s important to know that we will continue to make investments in our business and team—particularly in areas such as digital, personalization, data and analytics, and engineering—to position Target for future success,” Target spokeswoman Molly Snyder told Fortune in an e-mailed statement.
Before the layoffs, Target employed about 13,000 people in Minneapolis, as well as thousands more at area stores, making it one of the largest employers in Minnesota. The layoffs aroused the concerns of Governor Mark Dayton, whose father and uncles founded Target in 1962. Target CEO Brian Cornell met with Dayton this week and assured him Target would keep its headquarters there, the Minneapolis Star-Tribune reported.
The Star-Tribune also reported that employees carrying boxes and personal belongings could be seen leaving the company’s main building in downtown Minneapolis on Tuesday morning. The job cuts began last week with some senior executives, the paper said, citing Target employees it had interviewed.
Target said each laid-off employee will get at least 15 weeks of pay as well as additional severance amounts based on their length of time with the retailer.
As detailed in a recent cover story in Fortune, Target lost some of its cachet in recent years, weighed down by a heavy bureaucracy that stifled innovation and CEO Brian Cornell is making it a priority to change Target’s culture.