For Target, 2015 brought layoffs, empty shelves and hope

Target Chairman and CEO Brian Cornell
Target Chairman and CEO Brian Cornell speaks to target employees during Target's annual meeting in Minneapolis, Wednesday, Sept. 16, 2015.
Craig Lassig | AP

This was a tumultuous year for Target, as the company pulled the plug on some businesses, canned thousands of employees and forged ahead with CEO Brian Cornell's efforts to remake and revive the retailer.

Cornell took over as Target CEO in August of 2014, and by the start of 2015 he was really putting his stamp on the business.

In January, he announced Target would exit Canada. In March, the retailer cut 1,700 headquarters jobs as part of an effort to make the organization leaner. Then in June, Target announced it would sell its pharmacy business to CVS Health for $1.9 billion.

At Target's annual sales meeting in September, Cornell told roughly 13,000 employees packing Target Center that those and other moves were hard but necessary.

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"The change has been tough," he said. "But I hope we all recognize it's absolutely the right thing for the business. It's going to allow us to be more agile, make quicker decisions and unlock growth."

Shoppers complain that shelves are out of stock.
Shoppers complain that shelves at the Target on University Ave. in St. Paul are often out of stock. Here, beverage shelves on August 22, 2015.
Submitted photo

The retreat from Canada was especially bloody. Target had suffered operating losses of about $2 billion as the company struggled to keep stores stocked and divine how to please customers.

"It was devastating and quite a staggering story of corporate incompetence," said Kendra Coulter, a labor studies professor at Brock University in Ontario. "There was a perpetual problem with inventory not being replenished. People shopping were not happy."

Target's departure cost about 18,000 Canadian and 550 Twin Cities corporate employees their jobs.

Cornell has said the company's sales, stock price and other vital signs are much improved and that Target has turned the corner in its transformation.

Industry analysts concur that Target is in better shape. But they differ in their assessment of how much progress the retailer has made.

Kantar Retail analyst Amy Koo said Target is definitely back on the right path, but "there are just a lot of things that are still going on that I don't think Target has figured out."

At the top of the list is the grocery business. Koo said Target continues to experiment in the grocery aisles and talk about what it'll do but has yet to find a grocery strategy that really resonates with shoppers.

"They have still not put out an actual game plan," she said. "They've been trumpeting it. But they have not put out a prototype that they are happy with yet."

In the past year, Cornell has focused Target on so-called signature categories — stylish design, baby, kids and wellness. Retail consultant Carol Spieckerman said that focus has paid off. Sales in those categories have greatly outpaced Target's overall sales.

"The signature category focus," Spieckerman said, "that's really Target just saying, 'We've got to determine which categories are really going to drive the business. Which categories are really going to bring the margin that we need?'"

But Target has to further improve its game on the fashion front to truly regain its Tar-jay cachet, she said. And it needs to bolster its online sales efforts, too, she added. On CyberMonday this year, the retailer's website was once again overwhelmed by shoppers.

Target website down on Cyber Monday
Target's website was down on Cyber Monday, Nov. 30, 2015.
Screen grab of

Target's offer of a 15 percent discount for just about everything it sells online brought the website more traffic than it could handle. At times, Target had to limit how many customers could access the site. Some customers had to wait to shop.

The past year was also marked by Target's struggles to keep stores sufficiently stocked, especially with popular grocery items. At the company's annual sales meeting last September, images of empty store shelves flashed behind CEO Cornell as he declared a determination to fix the problem.

Edward Jones analyst Brian Yarbrough said stocking has been a lingering issue for Target. "It seems like their supply chain, there's always some little hiccup here, there," he said.

To retail consultant Howard Davidowitz, the jury is still out on Target, due to all the changes this year and the volatility of the industry.

"It's too early to diagnose Target because there's too much going on," he said. "The pharmacy was sold. Canada is closed. There was a blizzard of activity. The results are uncertain."

One thing that was resolved in the past year, it seems, is the fallout from claims related to hackers' theft of customers' payment card and personal information in late 2013. The financial hit for the retailer looks to be in the range of $200 million. Most of the money is going to banks and lawyers. Eventually, consumers are expected to share $10 million.