Target Corporation has reportedly announced that it will cut about 500 roles at the company, partially in an effort to reallocate financial resources to boost the in-store customer experience.
The job cuts would be the second major wave of cuts that Target has made in the last five months, and come less than two weeks after the company’s new CEO stepped into the role. Here’s what you need to know.
What’s happened?
On Monday, media outlets including CNBC and MarketWatch reported on a memo sent to Target employees by the company’s chief stores officer, Adrienne Costanzo, and its chief supply chain and logistics officer, Gretchen McCarthy.
In the memo, the executives announced that the chain would be initiating more layoffs—this time cutting around 500 positions.
However, the majority of the job cuts will not impact store-level retail workers. Instead, the memo says that about 400 jobs will be lost across its distribution and another 100 jobs will go across its store district level.
Fast Company has reached out to Target for comment. We’ll update this story if we hear back.
Target’s roughly 2,000 stores are divided into geographic districts staffed by corporate regional office workers. The memo stated that the number of these districts will be reduced, and thus some corporate workers overseeing these districts will be let go.
Target has around 440,000 employees, most of whom work in its retail division. Job cuts of around 500 mean Target is laying off about 1/10 of 1% of its workforce.
Why is Target cutting jobs?
Besides a reorganization of its geographic districts, the financial savings from job cuts will allow Target to reinvest more money into front-line in-store staffing. “This change also fuels our ability to put significantly more payroll in our stores—primarily in additional labor and hours where needed most, but also in new guest experience training for every team member at every store,” the memo stated.
In recent years, Target has faced customer criticism that checkout lines have gotten longer and stores have become messier. This has been attributed to lower staffing levels in stores and to store employees being taken off the floor to help fulfill online curbside orders.
But the job cuts also come less than two weeks after Target’s new CEO, Michael Fiddelke, stepped into the role at the beginning of this month. Fiddelke was named incoming CEO last year and had previously served as the company’s operating officer.
Fiddelke himself is the one who notified Target employees via memo in October that the company was laying off 1,800 workers. At the time, Fiddelke said those layoffs were “a necessary step in building the future of Target and enabling the progress and growth we all want to see.”
Target hit by external and self-made problems
In recent years, Target has had essentially flat year-over-year sales, not helped by the fact that many of its cost-conscious consumers are cutting back on their discretionary spending and inflation surges. A majority of the goods Target sells are discretionary items.
Additionally, many of Target’s products come from China and other countries in Asia that have been hit hard by President Trump’s tariffs, thus raising Target’s costs when it imports those goods to the United States.
The company also shot itself in the foot last year when it reversed course on its celebrated diversity, equity, and inclusion (DEI) initiatives in the wake of Trump entering the White House for a second term.
The reversal of its DEI policies led to fierce consumer backlash and boycotts, resulting in foot traffic falling by almost 8% in many of its stores.
How has Target’s stock price reacted to the layoff news?
Investors in Target Corporation (NYSE: TGT) seem unfazed by the news of more job cuts. Yesterday, TGT shares closed roughly flat to $115.52 per share. And in premarket trading this morning, TGT shares are up only about 0.4%.
Given this, investors seem to think the layoffs and district changes will have little meaningful impact on Target’s finances—at least in the immediate term.
The good news for Target is that, as of yesterday’s close, the company’s shares are up over 18% year to date. While the company’s stock price is still down about 12% over the past year, TGT shares have now recovered significantly since their November low of around $83.