New hires at the 20 department stores Target Corp. said Thursday it plans to open across the country in the coming weeks may not want to get too comfortable working long hours.
Employees at some of the 48 stores already opened as part of the first wave of Target’s launch this spring say weekly shifts have been cut back in recent weeks as the U.S. retailer adjusts staffing levels to a post-launch pace of sales.
Amanda, a store associate at one of Target Corp.’s three locations in Toronto, says that since May her hours have been cut to 14 a week, down from 35 when the store first opened in April.
Amanda, whose name has been changed at her request, said she feels lucky. The part-time social services student at Toronto’s Centennial College still lives with her mother who helps cover her expenses, she said.
The location’s store manager referred questions to Target’s Canadian head office, located in Mississauga, Ont.
He added, “People are adjusting.”
“In order to ensure we delivered a superior guest experience upon opening our first store, we made a conscious decision to ensure our stores were staffed with enough team members to handle the strong initial response,” Joanne Elson, a spokesperson for Target Canada said in an email message. “As we learn more about how Canadians shop our stores we may adjust our staffing accordingly while ensuring that we continue to provide great guest service.”
In the company’s first quarter of the year, which ended May 4, the Minnesota-based retail giant took in $86-million from its new Canadian stores, topping what the company was expecting.
“Whenever we open a new store in the U.S., there is a rush of traffic and sales as curious guests shop it for the first time,” John Mulligan, Target’s chief financial officer, said on May 22 conference call with stock analysts and investors. “But the rush in Canada exceeded our expectations.”
Mulligan said sales of the general merchandise Target sells, like discount designer clothing, patio furniture and household goods, would continue to “ramp up” as more stores opened, including 20 more announced Thursday.
Turning a profit however appears to entail reducing hours for many store associates following the initial wave of shoppers that comes through the door during a store’s launch.
“They have talked about the need to optimize their labour hours,” one Canadian retail stock analyst said. “There was going to be changes to the model going forward.”
Target isn’t alone in the practice of winnowing down staff hours as a big retail store settles in, Doug Stephens, consumer analyst and principal at Retail Prophet, an industry researcher said.
“It’s common to staff up big for openings and then scale to volume and traffic,” Stephens said.
Target executives said on the same May call they expect the company’s burgeoning Canadian business to begin generating positive earnings by the fall, helping to boost shareholder returns.
“We continue to feel very good about the health of our business and the steps we are taking to keep our business relevant over time,” Mulligan said. “We continue to invest” in numerous initiatives, including the Canadian rollout.
“Yet even with those initiatives, we continue to expect to generate far more cash than we need to invest in our business, giving us the opportunity to return billions of dollars to our shareholders through dividends and share repurchase.”
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