Target layoffs will hit 8% of global corporate workforce: Why the retailer is slashing jobs before the holidays

Yesterday, Target Corporation announced news that no one wants to hear—especially just before the holidays.

The Minneapolis-based retail giant informed employees that it is gearing up to eliminate 1,800 corporate roles at the company. Here’s when the layoffs will happen and what it means for the company and its employees.

Target to cull its corporate workforce by 8%

On Thursday, Target’s chief operating officer, Michael Fiddelke, who is set to become the company’s new CEO in February, reportedly sent a memo to employees at the 440,000-strong company.

According to numerous media reports, Fiddelke’s memo didn’t beat around the bush: the company has decided to eliminate 1,800 positions.

Yet the layoffs will not hit the majority of the company’s workforce. Much of its 440,000 employees work as retail members across its nearly 2,000 stores in the United States. The layoffs are not expected to impact these retail employees, who the company will rely heavily on during the upcoming holiday period.

Instead, the job cuts will hit Target’s corporate workforce. And as CNBC notes, citing the memo, 1,800 positions will be eliminated. The eliminations include 1,000 direct employee layoffs and another 800 roles that will no longer be filled.

In his memo sent to Target staff, Fiddelke said the elimination of 1,800 corporate roles represents a reduction of “about 8% of our global HQ team.”

Fiddelke’s memo included the usual platitudes that company leadership makes when laying off employees, noting the “real impact” that the layoffs will have on Target’s team and that the company never makes such moves “lightly.”

However, he also argued the layoffs are “a necessary step in building the future of Target and enabling the progress and growth we all want to see.”

Of course, the future of Target will be of little consequence to those losing their jobs ahead of the holidays.

Fast Company has reached out to Target for comment and will update this story if we hear back. A spokesperson told CNBC that, in addition to severance packages, those laid off will receive benefits and pay until January 3.

Competitors Walmart and Amazon are thriving

The layoffs may not be much of a surprise to people who have been paying attention to Target’s recent struggles.

While the company’s competitors, such as Walmart and Amazon, have seen their businesses—and stock prices—thrive, it’s been an opposite story for Target.

As my colleague Elizabeth Segran explored in May, Target had a “terrible, horrible, no good, very bad year.” In January, in the lead-up to Donald The President’s inauguration, Target announced it was reversing course on its celebrated diversity, equity, and inclusion (DEI) commitments.

Many loyal Target customers saw that as capitulation, and the backlash, in the form of boycotts, was swift, with foot traffic to many of its stores falling by up to 7.7%. 

And it’s not like President The President has done Target many favors, as his tariffs have had a measurable impact on Target’s costs.

The company acquires most of its items from overseas, including China. It must now pay more for those products and thus take a hit on its bottom line, or pass the cost of those price increases onto customers, which could lead to them buying less.

And those customers are already under pressure from inflation, which has caused them to pull back on their discretionary spending. That’s a big problem for Target, as the majority of the goods it sells are discretionary items. 

All of these issues are something that incoming CEO Fiddelke is going to have to fix, and, with yesterday’s announcement, it appears that he thinks layoffs are part of that fix.

TGT investors don’t seem to care about the layoffs

So far at least, Target’s investors don’t seem to think these layoffs will meaningfully impact the company in the short term. 

Often when a corporate giant announces mass layoffs, the company’s stock price spikes. That’s because layoffs are seen as the fastest way for a company to reduce its costs, which can help increase profits.

But looking at Target’s stock price (NYSE: TGT) this morning, it appears as if investors are shrugging off the news. As of this writing, TGT stock is up just half a percent to $94.75 in premarket trading. Yesterday, TGT shares closed up just a quarter of a percent to $94.25.

This suggests that investors are going to need to see a lot more change at the company—and with its finances—to get them excited about the stock again. 

And TGT stock has had a bad run as of late.

As of yesterday’s close, TGT shares were down more than 30% since the year began. Over the past 12 months, TGT shares have fallen more than 36%. And over the past five years, TGT shares have dropped a staggering 41%. 

During that same five-year timeframe, shares in competitor Walmart (NYSE: WMT) are up 122% and shares in Amazon.com (Nasdaq: AMZN) are up almost 38%.

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