Target cutting 550 MN jobs as it shutters Canadian operations
Updated 5:15 p.m. | Posted 9:56 a.m.
Target Corp. said it will cut about 550 positions at its Twin Cities headquarters as it liquidates its Canadian operations.
That includes some 350 Minnesota-based positions that are being eliminated today, the company said in a statement Wednesday.
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The Minneapolis-based retail giant announced in January it was closing its 133 stores in Canada and exiting the country's market after suffering operating losses of about $2 billion.
Target signaled then that the retreat from Canada would likely cost jobs in Minnesota.
The company on Wednesday said that affected employees will remain on the payroll for at least 60 days and will also receive severance. Target will also continue paying the employer portion of health coverage for six months.
Company officials declined to be interviewed about the job losses.
The cuts leave Target's headquarters headcount at about 13,000.Target also said the Canadian store liquidations will eliminate 170 jobs in India over time.
The looming question is whether the Twin Cities job count will keep falling.
In announcing the departure from Canada, CEO Brian Cornell said in January that the company would continue to look for ways to reduce expenses.
More job cuts are not a foregone conclusion but Target needs to up its game to avoid them, said Brian Yarbrough, a stock analyst who follows Target for the investment firm Edward Jones.
"If sales pick up and you see a nice revenue boost and things start getting better, I think you probably won't see additional layoffs," he said.
"But if things continue to hum long like they are and we don't see an improvement in sales and earnings, then I would expect them to look for additional ways to cut costs, which could be additional layoffs," he added.
Target executives say the exit from Canada will allow them to focus entirely on the U.S. business, which is still recovering from the 2013 holiday season data breach.
The company began to turn the page on that chapter in November when it reported its first increase in a year in same-store sales. And last Christmas was better than expected.
Ken Perkins, who follows Target for the investment research firm Morningstar, said he expects a push to sign up more Target REDCard users and draw more online shoppers. Target.com accounts for just 2 to 3 percent of all sales.
Perkins also says more small-footprint urban stores are probably on the horizon.
"I wouldn't be surprised to see those initiatives start to be ramped up over the next few years ... there is an opportunity there," he said.
But retail analyst Howard Davidowitz says Target blew a big opportunity by bowing out of Canada.
"Target is a company that has to have growth," he said. "It looked to me like the best way to grow was Canada."
Target's arch rival, Walmart, clearly sees opportunity there. The world's biggest retailer on Wednesday announced it's spending $270 million to expand in Canada.
As for Target, Davidowitz says without the Canadian operation, Cornell will be under heavy pressure from shareholders to boost earnings as growth slows at the chain's traditional big-box stores.
The retailer's latest earnings report for the critical holiday shopping season is due out in two weeks.
If Target's earnings don't meet expectations, Davidowitz said, future cost cuts and layoffs are inevitable.