NEW YORK —
Target Corp. is cutting several thousand jobs as part of a plan to
eliminate $2 billion in costs over the next two years.
The goal: to make
the Minneapolis-based discounter more agile to compete in an
increasingly competitive landscape and appeal to shoppers who are
buying and researching on their mobile devices.
As part of the
restructuring plans, Target will eliminate positions primarily at
its corporate headquarters — which employs 13,500 workers — as
well as Bangalore, India. The company also will establish
centralized teams based on specialized expertise.
Target also plans
to invest between $2 billion and $2.2 billion in capital
expenditures for the current fiscal year. That's in line with what
it spent a few years ago, but this year, about half, or $1
billion, will be spent on technology. That's a big shift from past
years when most was spent on new stores and renovations of its
fleet of about 1,800 stores.
The new focus
will help spur Target's online sales growth of 40 percent as well
as help fuel a total projected sales growth of 2 to 3 percent this
"We have to
be more nimble, more agile. We have to create a more innovative
culture," Brian Cornell, Target's CEO told analysts Tuesday
at a meeting in New York to outline growth plans.
after-hours trading, shares of Target added 19 cents to $78.19.
Cornell took the
helm last August and is charged with reclaiming the retailer's
image as a purveyor of cheap chic fashion merchandise. He replaced
Gregg Steinhafel, who resigned last May amid a massive data breach
that hurt sales and profits. Even before Cornell took the helm,
Target had begun to reassess its operations, sprucing up its baby
departments and adding mannequins to its fashion areas. Cornell
wants to double down on a handful of areas like fashion,
children's products and home furnishings. It's trying to
re-energize its clothing department and will launch in April a
limited-time-only collection with Lilly Pulitzer. It is also
reimagining its grocery area and wants to focus on organic,
natural and gluten-free and locally produced food.
The moves come
after Target lost its way during the Great Recession when it
aggressively expanded into basic groceries. That helped drive
traffic but diluted its cheap chic image. The company was also
dragged down by its botched foray into Canada two years ago. And
Target was behind other rivals in e-commerce services.
Cornell made the decision to shutter the Canadian business in
order to focus on revving up sales in the U.S. And the company is
expanding its services like shipping goods from store to speed up
deliveries. It also permanently cut in half its minimum online
purchase to qualify for free shipping, to $25. Target said
shoppers responded to its no-minimum free-shipping offer during
So far, the early
efforts are paying off. The discount retailer recorded
stronger-than-expected sales during the holiday season as shoppers
bought more clothing and other items.
As for its store
expansion, the company is taking a measured approach even with its
smaller stores. Target will open just eight TargetExpress
locations across the country this year. It will also test new
layouts in its general merchandise stores.
investors that the overall transformation will take time.
"It's not going to happen overnight," he said.