As Americans are feeling the pain of President Donald Trump’s economic policies, including the US leader’s global tariff war, Minneapolis-based Target told employees Thursday that the retail giant is pursuing its first major job cuts in a decade.
The Wall Street Journalreported that Michael Fiddelke, Target’s incoming CEO, said in a memo to staff that the company will lay off around 1,000 of its approximately 22,000 corporate employees and cut 800 open positions, mainly in the United States.
“The truth is, the complexity we’ve created over time has been holding us back,” wrote Fiddelke, who is set to take over for CEO Brian Cornell in February. “Too many layers and overlapping work have slowed decisions, making it harder to bring ideas to life.”
A Target spokesperson toldCNBC that no roles in stores or the company’s supply chain will be impacted. The last time the company announced mass cuts was March 2015, when it laid off 1,700 people and declined to fill 1,400 open jobs.
The Journal pointed out that “Target has reported 11 consecutive quarters of falling or weak comparable sales growth,” and CNBC highlighted that “its shares have fallen by 65% since their all-time high in late 2021.”
As CNBC also detailed:
Compared to retail competitors, Target draws less of its overall sales from groceries and other necessities, which can make its business more vulnerable to the ups and downs of the economy and consumer sentiment. About half of Target's sales come from discretionary items, compared to only 40% at Walmart, according to estimates from GlobalData Retail.As a result of that and other company-specific challenges, Target's sales trends and stock performance have diverged sharply from competitors. Shares of Walmart are up about 123% in the past five years, compared to Target's decline of 41% during the same time period.
Target is among several that responded to Trump’s return to office and executive order on diversity, equity, and inclusion initiatives by ditching its DEI policies. The decision caused some shoppers to boycott Target. While experts have debated the impact of the protest, it has certainly drawn attention to the company’s financial state.
“When Target reported $23.85 billion in first-quarter sales, it missed analyst expectations by nearly $500 million. Foot traffic has declined for 11 straight weeks, with Placer.ai data showing consistent year-over-year drops since the boycott began,” Investopediareported last month. “Comparable sales in the second quarter fell 1.9%, with both transaction frequency and spending per visit declining. Operating income dropped by a fifth (19.4%) to $1.3 billion in the second quarter, while earnings per share fell about 20% to $2.05.”
While acknowledging the DEI boycott, Bloomberg on Thursday also noted other issues, including that “many customers have pointed to long wait lines, empty shelves, and less distinctive items.”
“Getting back on track won’t be easy,” Bloomberg added. “Shoppers remain selective, with consumer sentiment remaining subdued on concerns around inflation and the job market.”