Target CEO Brian Cornell presented a plan to turn the company around to investors this week that included omni-channel growth; investment in the already strong style, baby, kids and wellness categories; more locally tailored product initiatives; and more smaller-format TargetExpress and CityTarget stores.
But the part of the plan that’s getting the most attention is the staff cuts: “several thousand positions over the next two years,” according to a summary released by Target. The company has 13,000 corporate employees at its Minneapolis-area offices and some thousands in Bangalore, India.
The cuts, along with the rest of the turnaround plan, could save the company $2 billion a year. The Minneapolis Star Tribune says that these lay-offs will be the largest ever for Target.
“The restructuring will be concentrated at Target’s headquarters locations and focus on driving leaner, more efficient capabilities, removing complexity and allowing the organization to move with greater speed and agility,” Target’s summary said.” This includes the establishment of centralized teams based on specialized expertise and the elimination of several thousand positions over the next two years. This year, Target expects to invest between $2 and $2.2 billion in capital expenditures, including a $1 billion investment in technology and supply chain.”
The cost-cutting measures shed some light on why the discount retailer may be reluctant to raise its minimum wages as has been done recently with Walmart and TJX Companies. (Kohl’s has also said it would not raise wages.)