Target confirms jobs to go at Geelong headquarters
Union officials came out of lengthy talks with Target executives on Friday to confirm the worst fears of its members and the city of Geelong, which has suffered a number of economic setbacks and job losses this year.
ASU Victorian branch secretary Ingrid Stitt said Target had confirmed jobs would be lost from the 1000-strong staff at Target's headquarters in Geelong, but no exact number was given.
It is possible that Target, owned by Wesfarmers, might be able to nominate a redundancy figure next week as part of a sweeping review and restructure of its business.
BusinessDay revealed on Wednesday that Target was reviewing its operations in the wake of a sharp downturn in its sales and profitability in the second half.
Staff cuts have already been made at its marketing department and speculation is mounting that as many as 200 more jobs might be carved out of the business.
The business review is being led by newly appointed Stuart Machin, Target's third boss in two years. The retailer has been hit by excess inventory and a poor start to sales for the second half, exacerbated by the late start to winter.
Wesfarmers shocked investors two weeks ago with a profit downgrade for Target, flagging a potential second-half loss. Chief executive Richard Goyder said full-year earnings before interest and tax at Target would be between $140 million and $160 million, from $148 million in the first half. This could see second-half earnings sink to an $8 million loss or, at the upper end, a $12 million profit.
Wesfarmers also owns Kmart, supermarket chain Coles, hardware group Bunnings and Officeworks.
The potential job losses at Target come at a tough time for the Geelong economy, with car maker Ford to pull out by 2016 with the loss of more than 500 jobs, and another 450 jobs in doubt at Shell with the company planning to sell its local refinery next year.
Frequently Asked Questions about this Article…
According to the article, Target confirmed that jobs will be lost at its corporate support office in Geelong. The headquarters has about 1,000 staff, but no exact redundancy number was given when the Australian Services Union reported the confirmation.
The article says Target is conducting a sweeping review and restructure after a sharp downturn in sales and profitability in the second half. Problems cited include excess inventory and a poor start to seasonal sales (exacerbated by a late start to winter), prompting the company to reassess operations.
The article notes staff cuts have already occurred in Target’s marketing department and speculates that as many as 200 more jobs could be cut. However, Target had not provided an exact total and may nominate a redundancy figure as part of the review.
The review is being led by Stuart Machin, who is Target’s third chief executive in two years. For investors, a leadership-led review usually signals management is attempting a turnaround, and outcomes such as cost cuts or strategy changes could affect near-term profitability and the parent company’s results.
Wesfarmers, which owns Target, issued a profit downgrade for Target that surprised investors. The company flagged full-year earnings before interest and tax at Target of between $140 million and $160 million, down from $148 million in the first half, and warned second-half results could range from an $8 million loss to a $12 million profit.
The article mentions that Wesfarmers also owns Kmart, Coles, Bunnings and Officeworks. Investors often view Target’s problems in the context of Wesfarmers’ larger portfolio, so weak results at Target can weigh on overall group earnings even if other divisions perform well.
The article points out Geelong is already facing economic pressure: Ford plans to pull out by 2016 with the loss of more than 500 jobs, and around 450 jobs at Shell are in doubt. Additional job losses at Target would therefore come at a difficult time for the local economy.
Per the article, investors should watch for Target or Wesfarmers announcements that nominate redundancy figures or give further detail on the restructure, updates on second‑half trading and profitability, and any management commentary from Stuart Machin or Wesfarmers’ executives that would clarify the size and timing of the turnaround.
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