Target is doubling its employee bonuses this year

In a rare show of financial strength, Target is doubling bonuses for salaried employees. 

The Minneapolis-based company will pay 100% of employees' eligible 2023 bonuses, up from 50% the year prior, people familiar with the matter said, asking not to be identified discussing private information. 

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The move comes as Target tries to reverse three consecutive quarters of sales declines. The company's profits rose higher than it was expecting last year, providing an extra pot of $2 billion in operating income from which to dole out bonuses and reward employees. Bonuses at Target typically max out at 175% of eligible amounts, some of these people said.

The increased payouts don't apply to hourly employees, and senior executives have a separate bonus structure, some of these people said. Cash bonuses will be payable at the end of March.

The company declined to disclose its potential bonus ranges or how many of its roughly 415,000 employees are eligible. Most Target workers are hourly store and distribution-center employees. "The bonus structure is informed by goals set at the beginning of the fiscal year and includes sales performance and profit outcomes," Target spokesman Brian Harper-Tibaldo said.

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Turnaround plan

Target thrived during the pandemic as consumers bought home goods and flocked to its delivery and pickup services. 

Operations started flailing in 2022 as inflation took hold and sales started slipping. Shoppers began prioritizing essentials and buying fewer Target mainstays like clothes and home goods. In response, Target marked down prices on excess inventory, denting profits. The company then faced a controversy over its collection of LGBTQ-themed goods last year that resulted in calls for a boycott and a dip in sales.

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In recent weeks, Target has struck a more positive tone. Shares jumped 12% after the company disclosed better-than-expected earnings thanks to lower inventory levels and supply-chain costs. The retailer also announced plans to launch a paid membership program and pledged to open and renovate hundreds of stores. 

Store and digital traffic are improving, though still in the red. Target now expects comparable sales to return to growth in the second quarter.

Rival Walmart in January announced a 3-for-1 stock split, a move that the company said would help more of its employees buy shares. It also increased compensation for store managers, whom it will offer stock grants as a new incentive.