Target Corp to cut several thousand jobs
04 Mar 2015
Target Corp is cutting several thousand jobs under a plan to eliminate $2 billion in costs over the next two years, the retailer announced yesterday.
The goal was to make the Minneapolis-based discounter more agile to take on competition and appeal to shoppers who were buying and researching on their mobile devices.
Under the restructuring plans, Target would cut positions primarily at its corporate headquarters employing 13,500 workers and at Bangalore, India. The company would also establish centralised teams based on specialised expertise.
The company also had planned investment between $2 billion and $2.2 billion in capital expenditures for the current fiscal year which aligned with what it spent a few years ago.
However, this year, about half, or $1 billion, would be spent on technology, which was a big shift from past years when most was spent on new stores and renovations of its fleet of about 1,800 stores.
Target operated 32 stores in Indiana including 12 in Indianapolis area. The new focus would help spur Target's online sales growth of 40 per cent as also help fuel a total projected sales growth of 2 per cent to 3 per cent this year.
The cost-cutting formed a key component of a revival plan outlined by chief executive officer Brian Cornell, who had sought to narrow the retailer's focus to a handful of product lines where Target believed it had an edge on quality and price while also investing to catch up with rivals online.
According to Cornell, Target's management needed streamlining and he wanted to change the corporate culture from one focused on process to one that met customers' demand.
Target added, it was revamping its merchandise, partly to attract both millenials and Hispanics, seen as important to driving future sales growth.
"We know that to compete today speed and simplicity are critically important," Cornell told a meeting of analysts in New York. "Executing on this plan will translate to growth."
Target's shares were up 32 cents, or 0.4 per cent, at $78.00, after initially retreating 2.2 per cent after the company offered its outlook on Tuesday.
Cornell, who had had stints at Wal-Mart Stores Inc, PepsiCo had moved fast after taking the helm in August in the wake of a massive breach of customer data in late 2013 that saw former CEO Gregg Steinhafel lose his job.
