Target zeros in on cutbacks amid downturn
NEW YORK -- — Discount retailer Target Corp. said Tuesday that it would cut 9% of its headquarters staff, close a distribution center and reduce planned store openings as it battled the weak economy.
The staff cuts include 600 employees and 400 open positions, mostly in the Twin Cities area of Minnesota where Target is based. This year the company also plans to close its Little Rock, Ark., distribution center, which employs an additional 500 people.
“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 chief executive.
Other cuts include a salary freeze for senior management, stopping share repurchases, tightening consumer credit-card underwriting and credit granting, improving store productivity and reducing planned store openings.
The changes will cost about 3 cents a share and be recorded mainly in Target’s fiscal fourth quarter, which ends Saturday.
Like most retailers, the Minneapolis company has suffered as consumers limit spending and shop mainly for necessities. Discounters in general have done better than specialty retailers, but Target has fared worse than rival Wal-Mart Stores Inc. because more than 40% of Target’s revenue comes from nonessentials such as clothing and housewares.
Target shares rose 19 cents to $33.34.
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