It wasn't too long ago that Target was eating WalMart's lunch. Those days are over. WalMart is now doing spectacularly well, given the poor economy. Target is not.
"Like many other companies, Target is taking actions to manage payroll and non-payroll expense in the current economic environment," Target said in a statement. "We believe the decisions we are making, though difficult, represent appropriate actions to manage our business and maintain our competitive advantage going forward."
In 2007, the company said it had 366,000 employees.
Update - A person commenting below, who was one of those let go, says 1,063 employees are affected.
Update 4:30 p.m. Here's Target's press release:
Target (NYSE:TGT) today announced a workforce reduction at our headquarters locations which affects 9 percent of our headquarters population. This includes the elimination of approximately 600 employees and 400 open positions, primarily in the Twin Cities area. The majority of these changes are effective today. In addition, the company announced it will close its Little Rock, Ark. distribution center, which currently employs 500 people, later this year.
The company has recently undertaken other actions to manage expense and capital investment and minimize the number of affected employees. These actions include suspending salary increases for senior management, suspending share repurchase activity, tightening credit card underwriting and credit granting, implementing initiatives to improve store productivity, reducing planned new store openings, and cutting outside contractor support, travel, entertainment and other headquarters operating expenses.
"We are clearly operating in an unprecedented economic environment that requires us to make some extremely difficult decisions to ensure Target remains competitive over the long-term," said Gregg Steinhafel, President and CEO of Target Corporation.
In recent months, Target has experienced weaker-than-expected sales, which is pressuring earnings performance. Combined with the outlook for continued difficult economic conditions well into 2009, the company is taking a more conservative approach to business planning.
Headquarters employees affected by the announcement will continue to receive their full pay and benefits through April 1, after which they will receive a comprehensive separation package based on their years of service. As part of that package, Target also will provide these employees with 12 months of continued Target health care benefits in addition to 12 months COBRA benefit, and outplacement support to assist them in transitioning to their next position. Little Rock distribution center employees will be offered positions at other Target distribution centers, or will receive comparable severance.
As a result of these actions, the company expects to record a charge of approximately 3 cents per diluted share, the majority of which will occur in the company's 2008 fourth quarter. The company believes the annualized benefit resulting from these actions will exceed the charge.
Target Corporation's retail segment includes large general merchandise and food discount stores and Target.com, a fully integrated online business. In addition, the company operates a credit card segment that offers branded proprietary and Visa credit card products. The company currently operates 1,682 stores in 48 states, 34 distribution centers and employs approximately 350,000 people worldwide.
Update 5:38 p.m. - This blog, written by a Target employee, has the details of an understandably somber meeting.
I WOULD BUY 10 DOLLAR CLEMENTINES FROM TARGET BEFORE I WOULD STEP A FOOT INTO WALMART.
15 percent!? If I may ask, what's your source?
I was one of the individuals let go. They provided the numbers per government regulation.
Dist: 502 Fin:144 HR:40 Legal:3 Marketing:4 Merch:17 Property Development:128 Credit Card:77 IT:148
Total Laid Off: 1063
The thing that really irritates me is that Target is still hiring for jobs at their headquarters in Bangalore, India. Remember, Target, that you always get what you pay for.