By Tom Webb
twebb@pioneerpress.com
POSTED: 03/04/2015 12:01:00 AM CST | UPDATED: ABOUT 2 HOURS AGO
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Some senior buyers are already gone. Vice presidents, too. But for 13,000 other Target employees in Minnesota, there's fear that the bull's-eye is on their backs.
Target jolted the Twin Cities on Tuesday when it said "several thousand" corporate staffers will be dismissed in a cost-cutting move. Executives didn't say who, when or where -- although the buzz is that the ax will swing freely next week.
Since the news broke, reaction to Target's $2 billion cost-savings plan has been split, especially by street.
On Wall Street, analysts mostly liked the plan. Target stock touched an all-time high Wednesday morning before slipping lower, after a flurry of analysts raised price targets.
"We came away positive on some of the early changes and direction the company is going," wrote Jefferies analyst Daniel Binder.
Efraim Levy, an analyst at S&P Capital IQ, upgraded Target stock to a "hold" from a "sell," but recognized there was pain along with the gain.
"Unfortunately for the employees that will be affected, it's a necessary part of the business," Levy said. "Competition doesn't stand still, and (Target executives) have to make themselves cost and operationally efficient and competitive."
But on the Nicollet Mall in Minneapolis, where Target has its world headquarters, morale was hardly at an all-time high. Online message boards were abuzz with worry and speculation about which departments were vulnerable, with special venting directed at former CEO Gregg Steinhafel and Target's board of directors.
On Wednesday, Target's chief financial officer, John Mulligan, spoke at a Merrill Lynch retail conference in New York, and was asked about the cost-cutting plan.
Mulligan drew a distinction between the efficiency of Target's stores, and its slow-moving Minneapolis headquarters.
"The headquarters kind of became the focus yesterday, because we talked a lot about simplifying and becoming more efficient in how we work," Mulligan said.
Mulligan noted that in Tuesday's cost-cutting announcement, "We said the word 'thousands' of positions at headquarters that'll be eliminated ... (but) there are some other areas where we'll continue to invest. We're going to continue to hire data and analytics individuals, engineers in technology, places we have to invest."
As it happens, Target opened a data and analytics office in Silicon Valley last summer, not far from the Target Technology Innovation Center it opened in San Francisco in 2013.
So a new geography seems to be emerging: the Twin Cities will lose thousands of Target corporate jobs, as Target's distant tech centers gain. Mulligan says redirecting funds to information technology is essential to Target's future.
"We spent 50 years building stores and that was our engine of growth," Mulligan said. "The reality today is, there's not going to be a (time) ... where the IT spending comes down because that is really the engine of growth."
Among some retail consultants, Target's reinvention plan drew some head-scratching about the glut of new directions.
"Didn't we just recently read that Target was going to focus on growth through the grocery silo? And today it is omni-channel retailing?" consultant Ed Rosenbaum wrote on RetailWire. "Stand by for tomorrow's latest and greatest revelation."
Mulligan also discussed other issues Wednesday. He tried to clarify Target's position on whether it would follow Walmart and raise wages for its lowest-paid workers.
"It seems that everyone's waiting for us to throw out a number that we're going to match," Mulligan replied. "Here's what I'd say. If, for instance, I threw out a number -- we're going to pay $9 (an hour) -- the stores in North Dakota would say, 'Are you kidding me?'
"The stores in North Dakota are the highest-paid in the chain because of the labor situation," Mulligan added. "So our goal has been and will be, we're going to be competitive on wages. ... To give an arbitrary number, some flat rate that we're going to pay across the country, that's just not reasonable."
On Wall Street, Target shares closed lower Wednesday, down 28 cents to $77.72.
CNBC stock maven Jim Cramer captured Wall Street's sentiment about the cost-cutting.
"I didn't know there are 13,000 employees at (Target) headquarters, which is what, 12,975 more than Warren Buffett has at his headquarters?" Cramer said on CNBC Wednesday. "You take $2 billion of costs out, you're not going to have 13,000 at headquarters."
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