Target Corp. is laying off 475 workers after a massive information-security breach stole the retail giant’s Christmas.
Minneapolis-based Target has also eliminated another 700 vacant positions over the last six months, company spokeswoman Molly Snyder said. The cuts are across the company’s operations, except that no workers in Canada are being cut, she said.
The company has struggled recently. First, like other middle-priced retailers, it has lagged the performance of very high-end and very inexpensive retailers. Then last month, disclosure of a data breach that let hackers steal 40 million customers’ credit card information from Target’s systems. Earlier this month, it said other information about 70 million customers, including e-mail addresses, had also been stolen during the breach.
“Retailing is in a transformative time,” Target spokeswoman Molly Snyder said. “We’re making decisions that will help us thrive and grow in the future.”
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Target’s problems in Canada, and the data breach, are just further complications for a company that has been caught between fellow discounters Wal-Mart and Costco, and especially hard-hit by competition from Amazon.com, William Blair analyst Mark Miller said in a Jan. 10 report.
“They used to be the best at selling value, on a broad assortment, to a higher-end consumer,” Miller said. “Now there is someone else who does a better job at the exact same thing.”
The 1,900 store chain employs 361,000 people, Snyder said. The affected workers will get at least 45 days severance, though longer-tenured workers may get more, she said.The company is continuing to recruit in some areas, especially to support its online and mobile commerce initiatives, she said,
The company said Jan. 10 that holiday sales had been running ahead of forecasts until the first data breach was disclosed Dec. 19, and turned “materially weaker” after the disclosure.
The company said comparable store sales would decline about 2.5% for the fourth quarter, compared with the same period in 2012. The company expects fourth-quarter earnings of $1.2 to $1.30 per share, compared with $1.50 to $1.60 before the breach was disclosed.
In the first nine months of the year, Target’s net income fell 46%, with much of the blame falling on higher-than-expected losses on the company’s Canadian expansion, according to Target’s federal securities filings.
Snyder declined to say what parts of Target bore the brunt of the cuts. Local outlets in the Twin Cities reported large cuts in marketing, finance and technology services functions.
Courtesy of USA Today