Target Issues Layoffs: At Least 1,000 To Lose Jobs
Target has announced that it will cut 9% of its headquarters staff and close a Arkansas distribution center, which includes 600 employees and 400 open positions, according to a statement issued by the company. These changes will be effective immediately.
Target will also close a distribution center in Arkansas, which employes another 500 people, later in the year.
“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,” Gregg Steinhafel, president and chief executive, said in the release.
Target has taken other steps to cut costs as well, including salary freezes for senior management, suspending share repurchase activity, tightening credit card underwriting and granting, improving store productivity as well as cutting back on opening new stores.
This follows months of lower-than-expected sales at Target stores, as the retail industry continues to struggle. This, combined with a poor outlook throughout 2009, the company claims its actions are a conservative approach to planning.
From the release:
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.