Target (NYSE: TGT) is aggresively trimming expenses as it struggles to recover from a dismal holiday season following its massive data breach. The retailer announced Wednesday that it would be slashing 475 jobs from its workforce around the globe and discontinuing healthcare coverage for all part-time employees.
"Today we informed our team that approximately 475 positions are being eliminated worldwide," Target said in a statement. "We believe these decisions, while difficult, are the right actions as we continue to focus on transforming our business."
The layoffs reportedly began Wednesday morning at Target's Minneapolis headquarters, as employees were called in for mandatory 15-minute private meetings. The affected workers will get at least 45 days severance, though longer-tenured workers may get more, Target said.
Target also indicated it will not fill 700 positions that are currently open, however, the company is continuing to recruit in areas that support its online and mobile commerce businesses.
In addition to scaling back staffers, Target will no longer offer health coverage for its part-time workers. The company said that the majority of its part-time workforce does not enroll in healthcare coverage currently offered by the retailer, thus the changes will affect less than 10 percent of its total workforce. The health insurance coverage will be discontinued from April 1.
In lieu of health coverage offered by Target, the company is encouraging part-time employees to seek coverage through public exchanges set up under the health care law, also known as Obamacare, which allows individuals to buy government-subsidized healthcare based on their income. Target said it will give $500 in cash to employees that lose coverage due to the change.
"By offering them insurance, we could actually disqualify many of them from being eligible for newly available subsidies that could reduce their overall health insurance expense," Target said in a company blog post on Tuesday.
The news of the job and insurance cuts come as reports are surfacing that Target had a chip-based smart card program 10 years ago but failed to successfully roll it out. The retailer planned to install special readers that could swipe chip-based credit cards, which are embedded with a smart chip that makes the card more secure than those with only a magnetic swipe. Target canned the $40 million project after three years because execs, including current CEO Gregg Steinhafel, then Target's president, thought the system made checkout speeds too slow and banks refused to spend the money to issue new cards.
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