Target Corp. cut 1,700 people at its corporate offices in the Twin Cities on Tuesday, the largest downsizing of its headquarters staff ever and the biggest at any Minnesota company since 2002.
The retailer’s top managers had set the company’s employees on edge a week before by announcing plans to cut “several thousand” corporate jobs. On Tuesday they lost no time in implementing their plan, with workers cut loose en masse.
Target then released a statement announcing the precise number of the layoffs. The company added that 1,400 open jobs would not be filled. The cuts amounted to 13 percent of the 13,000 HQ employees in the metro area. They come on top of the 550 corporate workers in the Twin Cities who were let go last month because of Target’s decision to close its Canadian operations.
The cuts are part of an effort by Target to save about $500 million this year. Chief executive Brian Cornell last week said they were necessary to speed up decisions and projects at the nation’s fourth-largest retailer.
“Today is a very difficult day for the Target team,” the company said in a statement, “but we believe these are the right decisions for the company.”
By midmorning, fired workers were streaming out of Target offices, many carrying their personal items in identical boxes. Some were accompanied by colleagues who’d survived the cuts.
In downtown Minneapolis, where Target is the largest employer with 10,000 people, groups of Target employees huddled in skyways with colleagues who were let go. Some wiped at the corners of their eyes and exchanged hugs.
“I was going in feeling OK. I didn’t prep for this,” said Chris Webley, a 27-year-old fabric engineer, as he left Target’s Nicollet Mall tower with some colleagues. He’d gone to work thinking there was a 50-50 chance his job would survive.
Target was his second employer since college, a “dream job” that paid in the $70,000 range, he said. He thinks his chances of finding another position soon are good.
“My expertise is a niche market,” he said. “Opportunities will be there.”
The cut is the biggest in one blow by a Minnesota company since Fingerhut, a catalog retailer, in April 2002 eliminated 2,400 jobs in a single day at a distribution plant in St. Cloud and offices in Minnetonka and Brooklyn Center.
Other once-huge Minnesota companies, such as Control Data in the late 1980s and ADC Telecommunications in the early 2000s, underwent larger downsizings over prolonged periods. Control Data in 1989 closed a St. Paul plant that led to 800 immediate job cuts. The closure of Ford Motor Co.’s St. Paul manufacturing plant, which took place in phases ending in 2011, wiped out 2,000 jobs.
Those companies were involved in wrenching changes when they made their big cuts.
Target in recent years has been hit by significant, if not catastrophic, setbacks. Its sales grew more slowly than planned and a rapid expansion in Canada that started in 2012 produced $2 billion in losses in 2013 and 2014. A data breach during the 2013 holiday season also generated national headlines and cost the company goodwill with shoppers.
But Target’s business is broadly solid, with $72.6 billion in revenue last year and profits projected to grow about 40 percent over the next five years. On Monday, Target’s stock closed at an all-time high of $78.57. Its shares fell 1 percent Tuesday amid a market sell-off.
Though cutting staff will save money, Cornell and other Target executives in comments to investors last week focused more on the necessity of speeding up an organization where decisionmaking had become bogged down.
“We know that to compete today, speed and simplicity are critically important,” Cornell said at the March 3 meeting where the cost cuts were first announced. “We are looking at every opportunity to eliminate complexity.”
Layoffs began at the senior executive level last week, employees told the Star Tribune in recent days. Some upper managers were let go Monday.
Employees had braced for job cuts since Cornell, the first outsider to lead Target, arrived last August.
“I noticed the company was top heavy when I started a year and a half ago,” said Webley, the fabric engineer.
Brian Yarbrough, an analyst at Edward Jones, said investors expected significant trims at the management level.
“When Brian [Cornell] got there and starts saying that it takes too long to get things done, that tells me there are too many cooks in the kitchen, too many layers of managers,” he said. “They weren’t nimble enough, weren’t taking enough risk.”
The Minnesota economy, one of the nation’s strongest at the moment, will be able to absorb many of the workers, said Paul DeBettignies, principal of Minnesota Headhunter LLC in Minneapolis.
Many Twin Cities companies complain that there is a shortage of available talent, but DeBettignies said the problem is the rigidity of job postings. “For companies in town, this is an opportunity for them,” he said. “If they’ve been wanting to grow … they’ll find some really talented people right now.”
Including the 14,000 people in its Minnesota stores, Target is the state’s largest employer after the state and federal governments and Mayo Clinic. On Monday, Cornell told Gov. Mark Dayton, whose father and uncles started Target in the 1960s, that the company was committed to its Minneapolis headquarters.
Target is also managing the dismissal of 17,600 workers from the Canadian stores it is shutting down. It employs about 350,000 worldwide.