Theft To Cost TGT $500 Million
Beyond macroeconomic challenges, we continue to contend with significant headwinds caused by inventory shrink, building on a worsening trend that emerged last year. While shrink can be driven by multiple factors, theft and organized retail crime are increasingly urgent issues impacting the team and our guests and other retailers. The problem affects all of us, limiting product availability, creating a less convenient shopping experience, and putting our team and guests in harm’s way.
The unfortunate fact is violent incidents are increasing at our stores and across the entire retail industry. And when products are stolen, simply put, they’re no longer available for our guests who depend on them. And left unchecked, theft and organized retail crime degrade the communities we call home. As we work to address the problem, the safety of our guests and our team members will always be our primary concern.
As a result, we are engaged in a variety of mitigation efforts, which begin with significant resource investments to protect our team and our guests. In addition, we’re installing fixtures to protect merchandise and adjusting our assortment in affected stores.
Beyond safety concerns, worsening shrink rates are putting significant pressure on our financial results. More specifically, based on the results we’ve seen so far this year, we expect that shrink will reduce our profitability by more than half a billion dollars compared with last year.
And while we’re doing all we can to address the problem, it’s an industry and community issue that can’t be solved by a single retailer. That’s why we’re actively collaborating with legislators, law enforcement, and retail industry partners to advocate for public policy solutions to combat organized retail crime.
As we communicate with those partners, we emphasize that we’re focused on keeping our stores open in the markets where problems are occurring. Our stores create jobs, serve local shoppers, and act as critical hubs in communities across the country, and we’ll continue to do everything in our power to keep our doors open. At the same time, we’ll be closely monitoring the safety of our team and guests as well as the financial impact to our business as we determine the right path forward at Target.
More and more lately I’ve noticed merchandise being locked up at drug stores. When I was in Las Vegas last December, I went into a CVS in which almost everything was behind locked hard plastic doors. Apparently a bunch of shoplifters the cashier had just chased away told him they were going to sue the company for preventing them from stealing.
I was reminded of that when I was just reading through Target’s (TGT) conference call transcript from yesterday morning. Because CEO Brian Cornell devoted a good portion of his prepared comments to the issue of theft. I’ve never seen this before. In addition to costing TGT $500 million more this year than last, this is obviously a safety issue.
A few weeks ago a shoplifter at a Walgreen’s in San Francisco brazenly tried to walk right past a security guard. The security guard used force to stop him and eventually ended up shooting him. It’s scary to think that any time you enter a CVS, Walmart or Target, you are potentially at risk of getting in the middle of a crime.