Retail giant Target is blaming a surge in “organized retail crime” for a $400 million reduction in gross profits.
In a third quarter earnings call, the company cited an inventory shrinkage for a $400 million reduction in gross profit in 2022 compared to last year, Yahoo Finance reported. Target CFO Michael Fiddelke expects the disappearance of merchandise to reach $600 million by the end of the year. He specified theft as a “key driver” of profit loss in retail that has gotten “increasingly worse over the last 12 to 18 months.” Target is taking actions to curb the increase in retail theft felt by the store and its competitors, Fiddelke explained.
The company’s profits in the third quarter plunged 52% as the retailer warned of a sluggish holiday shopping season, CNN reported. Target CEO Brian Cornell believes inflation and economic difficulties played a central role in the company’s lackluster quarterly profits.
$TGT shares are down nearly 33% for the stock’s peak in mid-April, and almost 13% this afternoon. On a Q3 earnings call this morning, Target cited “organized retail crime” has driven $400 million in extra profit loss for the retailer this year.
— Yahoo Finance Plus (@yfinanceplus) November 16, 2022
Shares in Target have dropped 20% over the past year and fell by 15% following the company’s earnings call, CNBC reports. The Target stock price drop has led to a sluggish day for markets as a whole, particularly in the retail sector.
A report from the National Retail Federation details how goods stolen from stores went up to $94.5 billion in losses in 2021 from $90.8 billion in 2020. The National Retail Security Survey focused on the state of national retail security and organized crime for the industry as a whole. Participating retailers attributed the greatest portion of inventory shrink to external theft, including organized retail crime in the 2021 fiscal year, according to the report. External theft constituted 37% of inventory shrinkage compared to 28.5% for internal theft and 25.7% for process/control failures. Other sources and unknown losses made up the remaining shrinkage.
“The majority of respondents report incidents of guest-on-associate violence, external theft and organized retail crime, in particular, have become more of a priority compared with five years ago. However, respondents also indicated that other violent threats such as mass violence/active assailants (57.9%) and gun violence (52.6%) have risen in priority in recent years,” according to the report.
Target did not immediately respond to the Daily Caller’s request for comment.