I’m surprised Woke Target would admit that people who take their goods through diverse ways of acquisition such as theft are a problem at all.
Inventory shrinkage — the loss of items to retail theft, organized crime, damage, vendor fraud, and other factors — is still a major headache for US retailers. At least, that was a common thread heard on recent earnings calls from Home Depot (HD), Target (TGT), Walmart (WMT), and other large retailers last week.On Wednesday, Target CEO Brian Cornell said the retailer is up against “an unacceptable amount of retail theft and organized retail crime.” Last November, Target CFO Michael Fiddelke said the disappearance of merchandise caused a $400 million hit to the retailer’s gross profit margin for the year.
“Shrink in the second quarter remained consistent with our expectations but well above the sustainable level where we expect to operate over time,” Cornell said in the company’s Q2 earnings call.
Walmart US CEO John Furner echoed that sentiment, saying: “Shrink has increased a bit this year. It increased last year. It’s uneven across the country.”
Retail theft weighed profit margins too. Just ask Home Depot.
“In the second quarter, our gross margin was 33%, a decrease of 8 basis points from the second quarter last year, primarily driven by pressure from shrink,” Home Depot CFO Richard McPhail said on the earnings call. “Shrink has been a consistent pressure over the last several quarters and even the last few years. It’s something we’re tackling every day.”
According to the National Retail Federation’s (NRF) National Retail Security Survey, retail shrink was a nearly $100 billion problem for the industry as of 2021, the last year data was collected. That cost more than doubled from $45.2 billion in 2015.
“I can tell you that never before have I seen what I’m seeing today,” David Johnston, NRF vice president of asset protection and retail operations, told Yahoo Finance. “The retailers are not crying wolf. They are highlighting a major issue out there.”
It’s not just shoplifting — organized retail crime and employee theft have become growing concerns, according to the NRF.
Violence is a bigger issue too: According to Cornell, Target stores saw a 120% increase in theft incidents involving violence or threats of violence in the first five months of 2023.
Dick’s blames ‘increasingly serious’ organized theft for 23% profit plunge…
www.cnn.com/2023/08/22/business/dicks-retail-theft/index.html