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Target has announced it will reduce bonuses for salaried employees due to weak consumer spending and inflationary pressures.
Bloomberg, citing sources with knowledge of the situation, said employees will receive 87% of their eligible 2024 bonuses, a sharp decline from the previous year, when workers received 100% of their bonuses, with some even seeing their payouts double.
The bonus cut follows Target’s (TGT+0.09%) March earnings report, in which it issued a cautious outlook, citing “ongoing consumer uncertainty” and concerns over tariff impacts. Target did not immediately respond to Quartz’s request for comment.
CEO Brian Cornell warned that fresh produce imports from Mexico – specifically bananas, avocados, and strawberries – would be directly affected by these tariffs, leading to price hikes. Executives also said they would move from quarterly guidance to an annual forecast to better manage volatility.
Further complicating matters, Target has pulled back Diversity, Equity, and Inclusion (DEI) initiatives, a move that has led to a significant drop in foot traffic. While retailers like Walmart (WMT+0.04%) and McDonald’s (MCD+1.21%) have scaled back similar programs, Target’s decision has prompted a 40-day boycott. Adding to the company’s struggles is a lawsuit from shareholders, who allege Target concealed the risks tied to its DEI efforts. The state of Florida has filed a similar lawsuit.
Once a favorite for its “Tarzhay” shopping experience, Target has struggled to capture the attention of bargain-hunting consumers for quite some time. In Nov. 2024, the company reported its largest earnings miss in years, prompting its stock to fall over 20%. Despite these challenges, Target has aggressively slashed prices on thousands of non-essential items like apparel and home goods in hopes of drawing customers back. Even a partnership with Taylor Swift, in which the retailer sold “The Eras Tour Book,” saw significant in-store traffic during the holiday season.
To turn things around, Target plans to invest between $4 billion and $5 billion this year to upgrade existing and stores and open at least 20 new locations, with three already opened in Arizona, California, and Texas. The company aims to add around 300 U.S. locations over the next decade. As part of its push to regain market share, Target is expanding its private-label food line, Good & Gather, with 600 new food and beverage items.