Target Corp. chief executive officer Brian Cornell wasted little time in delivering the job cuts he outlined to investors last week.
Target Tuesday informed 1,700 employees that their positions were being eliminated as part of a plan, disclosed at the company’s investor conference on March 3, to cut about $2 billion in costs over the next two years. Included in the cuts would be “several-thousand positions,” Target said, declining to be more specific.
In a regulatory filing with the Securities and Exchange Commission Tuesday, Target said the first round of cuts would result in severance costs of about $100 million, “all of which are expected to require cash expenditures.” Those expenses will be booked as a pretax charge in Target’s financial results for the first quarter ending May 2.
It didn’t disclose the effective date of the terminations or the distribution of cuts throughout its organization, which are expected to be focused on jobs at its Minneapolis headquarters.
The workforce reductions are one part of a transformation of the business being undertaken by Cornell, who succeeded Gregg Steinhafel as chairman and chief executive officer of Target in August. Among its priorities are a greater focus on a “channel-agnostic approach” to its business, investments in technology to support digital growth and an emphasis on its apparel business and newer store formats, such as TargetExpress and CityTarget.
Target estimated at its conference that capital expenditures during the current year would total between $2 billion and $2.2 billion, including a $1 billion investment in technology and supply chain.
Steinhafel resigned in May following a data breach that took a serious bite out of Target’s holiday 2013 sales. Fourth-quarter comparable sales fell 2.5 percent and the company lost nearly $1 billion for the full year on its failed entry into Canada. The Canadian operation was closed and its assets placed under bankruptcy protection in January with associated pretax losses for fiscal 2014 totaling $5.1 billion.
Shares of Target slipped 1.2 percent to $77.67 in New York Stock Exchange trading Tuesday.