Topline
Target will close nine stores in four states in response to “theft and organized retail crime” threatening the safety of staff and guests and hurting business performance—an increasingly common cry among various retailers this year.
Target cited safety and revenue concerns in the statement. (Photo by Beata Zawrzel/NurPhoto via … [+]
Key Facts
Target announced the closures in a statement Tuesday, saying one New York City store, two Seattle stores, three Bay Area stores and three Portland stores will be closed by October 21.
Target, which has nearly 2,000 stores in the U.S., fell short in sales estimates last quarter, a financial burden it partially attributed to increased levels of shrink—the term used to describe loss of inventory due to things like shoplifting, return fraud or employee theft.
The retailer said in May it expected related theft losses to total $500 million more than 2022, a projection that could mean $1.2 billion in losses if it came true, according to the Associated Press.
Contra
Target’s retail theft concern is one that is difficult to properly quantify outside of the reports and projections given by retailers themselves, according to the Marshall Project. The nonprofit news organization reported in February that the difficulty comes from most police departments not distinguishing between retail theft and other forms of robbery. Additionally, many law enforcement agencies have elected to not report their crime data to the FBI in recent years.
Tangent
Target shares closed down more than 2% on Tuesday, trading at $109.48 by market close. The company’s stock has trended downward since February, when it was trading as high as $181 per share.
Key Background
Other companies that have blamed poor business performance on shrink include Dick’s Sporting Goods, Ulta, Home Depot, Walgreens and more. Dick’s said in a quarterly earnings report in August that shrink largely contributed to a decline in net income, which clocked in at $244 million last quarter compared to the $318.5 million reported in the same three-month period last year. A Wedbush Securities analyst said in a note from that same month that shrink has hindered several retailers, but added the August report from Dick’s was the first time the company identified the problem in relation to earnings. Metropolitan areas of Los Angeles, San Francisco, New York, Houston and Miami were the regions most affected by theft last year, according to a National Retail Federation study.
Further Reading
Dick’s Sporting Goods Blames Earnings Slump On Theft—Joining Other Major Retailers (Forbes)
Target to close 9 stores including 3 in San Francisco, citing theft that threatens workers, shoppers (AP)
Source: https://www.forbes.com/sites/antoniopequenoiv/2023/09/26/target-shuttering-nine-locations-over-retail-theft-concerns-shared-by-other-retailers/