Target estimated that the theft of merchandise by so-called retail organized crime has left estimated losses of $400 million dollars so far this year.
Target’s earnings are being affected not only by changes in consumer buying habits, but by what has been defined as a looting in the company stores.
The third-quarter report was affected by the theft of merchandise from company warehouses, Target executives said on an earnings call.
As detailed, theft proceeds of retail organized crime has left the company with $400 million in gross profit losses so far in 2022.
These problems are added to the challenge that the store has to reduce its inventory, which accumulates in its warehouses after consumers changed their consumption habits after the pandemic and, more recently, due to the increase in prices due to historical inflation. .
“At Target, incremental shortages have already reduced our gross margin by more than $400 million compared to last year and we expect it to reduce our gross margin by more than $600 million dollars by the end of the year,” explained Target’s CFO, Michael Fiddelke.
The executive added that among “a handful” of things that can affect the store’s profits, theft stands out, which “is undoubtedly a key factor.”
“We know we are not alone in retail, seeing a trend that has worsened more and more in the last 12 to 18 months,” Fiddelke said.
“We are taking the right steps in our stores to help curb that trend where we can, but that becomes an ever-increasing obstacle to your business and you know that for the business of others”, he pointed out.
According to a report by Yahoo! Finance, a Target spokesperson, confirmed that most of the company’s losses are attributable to merchandise theft from retail organized crime.
Product theft has become a multi-billion dollar problem for retail storesaccording to a recent report published by the National Retail Federation (NRF).
According to the NFR, the cost to businesses of product theft increased to almost $100 billion dollars in 2021, from the estimated $90.8 billion in 2020.
“Retailers face security-related challenges on many fronts,” the NRF said in the report.
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Source: La Opinion