Target Blames $600M Loss On “Organised Retail Crime”
Target has blamed shoplifters for a $593 million gross profit reduction this year, attributing the losses to “organised retail crime.”
Target made these claims on a call to media to discuss its third quarter earnings.
“Inventory shrinkage” has reduced the company’s gross profit margin by US$400 million so far in 2022, compared to the prior year.
“At Target, year-to-date, incremental shortage has already reduced our gross margin by more than $400 million vs. last year,” Target CFO Michael Fiddelke said on the earnings call, “and we expect it will reduce our gross margin by more than $600 million for the full year.”
Fiddelke notes there were “a handful of things that can drive shrink in our business and theft is certainly a key driver.
“We know we’re not alone across retail in seeing a trend that I think has gotten increasingly worse over the last 12 to 18 months.
“So we’re taking the right actions in our stores to help curb that trend where we can, but that becomes an increasing headwind on our business and we know the business of others.”
Fiddelke is right in saying there’s a trend.
Goods stolen from American stores increased to US$94.5 billion in losses in 2021, up from US$90.8 billion in 2020, according to a new report from the National Retail Federation.
“Retailers face security-related challenges on many fronts,” the NRF said.
“Most of the retailers surveyed report in-store, e-commerce and omni-channel fraud are all on the rise. The majority of respondents also reported that guest-on-associate violence, external theft, ORC and cyber crimes have become higher priorities for their organisations.
“Challenges with labor shortages, employee retention and hiring – as well as issues related to masking and maintaining COVID precautions – have contributed to the risks of violence and hostility.”