Target Restructures Workforce: Will the Bold Move Pay Off?

Target Corporation TGT is taking bold steps in response to mounting competitive pressures. According to CNBC, the retailer announced plans to eliminate about 1,800 corporate positions, a move that includes 1,000 layoffs and the removal of roughly 800 roles, representing about 8% of its global workforce. The decision, revealed in a memo from incoming CEO Michael Fiddelke, underscores the company’s urgency to revive growth. 

The Minneapolis-based retailer aims to streamline decision-making, create a leaner operating structure and prioritize critical projects to rebuild customer loyalty. The timing of the layoffs, just before the holiday shopping season, signals Target’s push to fast-track its turnaround and strengthen competitiveness ahead of the busiest retail period.

For a brand long known for affordable style and convenient shopping, Target’s recent performance signals operational challenges. Despite past investments in supply-chain improvements and owned-brand development, TGT has yet to regain steady sales growth. The company has struggled to maintain momentum in an increasingly competitive retail landscape, where Walmart Inc. WMT and Amazon.com, Inc. AMZN have continued to expand their market share through pricing power, logistics efficiency and digital reach.

Target experienced a decline of 1.9% in comparable sales during the second quarter, following a 3.8% drop in the first quarter. Target had guided a low-single-digit decline in sales for fiscal 2025. We anticipate comparable sales to decrease 1.4% and 1.3% in the third and fourth quarters, respectively.

While short-term hiccups are inevitable, Target looks focused on getting back on a growth path. The real test will be whether these workforce reductions translate into faster execution, sharper merchandising and renewed customer engagement.

What the Latest Metrics Say About TGT

Target has seen its shares decline 37.6% in the past year against the industry’s growth of 7.8%. On the other hand, shares of Walmart and Amazon have rallied 29.5% and 17.3%, respectively, in the aforementioned period.
 

From a valuation standpoint, Target's forward 12-month price-to-earnings ratio stands at 11.91, lower than the industry’s ratio of 30.26. TGT carries a Value Score of A. Target is trading at a discount to Amazon (with a forward 12-month P/E ratio of 29.45) and Walmart (37.64). 
 

The Zacks Consensus Estimate for Target’s current financial-year sales and earnings per share implies a year-over-year decline of 1.4% and 16.3%, respectively. 
 

Target currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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