After a sluggish year of sales and a rough Christmas season, Target says it's eliminating 475 employees from its workforce. The company is not saying where those workers are, or what departments are affected. But analysts say there could be more job cuts in the near future as the retailer continues to navigate rough seas.
Target is keeping the details of this latest round of job cuts close to the vest. Spokeswoman Molly Snyder would not even hint at how many of the 11,000 downtown Minneapolis headquarters employees are affected. She would only say that it's a "very small percent."
As an organization, Target continually assesses our operating model to ensure we are well-positioned to adapt to changing business needs. Today we informed our team that approximately 475 positions are being eliminated worldwide. We believe these decisions, while difficult, are the right actions as we continue to focus on transforming our business. We will continue to invest in key business areas to strengthen our ability to compete and thrive well into the future.
Snyder's non-specific figure appeared to hold up at Devil's Advocate, a bar about a half-block from Target's Nicollet Mall headquarters. The bar's owner offered free beer to any pink-slipped Target worker. But at happy hour yesterday, only one showed up.
The 35-year-old former employee did not want his name used because he's still working out his severance package. He says he was a bit surprised to find himself out of a job, but rumors of layoffs had been floating around the company for awhile.
"With my area, we'd done the process improvements necessary where we didn't need as many superviors as we had. I don't want to say I knew it was coming, but it wouldn't be unexpected for a company the size of Target," he said.
The former employee says he saw a few familiar faces in his final meeting with the human resources, but no one he knew by name. He says he's not bitter about his situation.
Target cut about 150 jobs in the Twin Cities back in October. And New York retail analyst Howard Davidowitz says there could be even more cuts coming down the pike.
"If business continues soft, management must react on the expense line. In other words you can't allow overhead to grow out of proportion. Target is a discount business," he said.
Davidowitz says Target is facing a growing challenge from online juggernaut Amazon. And with median household income still struggling to recover from the recession, shoppers are being careful with their spending.
"Target does a very credible job in all areas. But it's not easy it's going to be tough, and business is going to continue to be tough," he said, adding that the company also faces a major challenge in dealing with the fallout of the holiday season data breach. The company says this latest round of layoffs is not related to the data breach.
Ken Perkins, an analyst with Morningstar, says it could take some time before the extent of Target's liability from the data breach is known. And he says yet another factor weighing down the company's finances is its troubled expansion into Canada.
"The Canada operations have already started, and the company is on track to lose quite a bit of money this year, potentially a billion dollars with that business," he said.
Target would not say if more job cuts are on the way. But in addition to this latest round of layoffs, the retailer says another 700 open positions will remain unfilled.