Target Corporation Announces Workforce Reduction

(BUSINESS WIRE)--Target (NYSE:TGT) today announced a workforce reduction at our headquarters locations which affects 9 percent of our headquarters population. This includes the elimination of approximately 600 employees and 400 open positions, primarily in the Twin Cities area. The majority of these changes are effective today. In addition, the company announced it will close its Little Rock, Ark. distribution center, which currently employs 500 people, later this year.

The company has recently undertaken other actions to manage expense and capital investment and minimize the number of affected employees. These actions include suspending salary increases for senior management, suspending share repurchase activity, tightening credit card underwriting and credit granting, implementing initiatives to improve store productivity, reducing planned new store openings, and cutting outside contractor support, travel, entertainment and other headquarters operating expenses.

“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,” said Gregg Steinhafel, President and CEO of Target Corporation.

In recent months, Target has experienced weaker-than-expected sales, which is pressuring earnings performance. Combined with the outlook for continued difficult economic conditions well into 2009, the company is taking a more conservative approach to business planning.

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.

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