Target lost an additional $500 million from organized retail crime at its stores compared to last year, the company announced Wednesday.
CEO Brian Cornell said on the company’s fiscal first-quarter earnings call that slowed sales and hesitant shoppers are not the only reason for losses this year, as stolen goods put a sizable dent in the company’s earnings.
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“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,” Cornell said.
Chief Financial Officer Michael Fiddelke said that lost inventory, referred to in retail as “shrink,” reduced the company’s first-quarter earnings by 1% compared to last year.
Target missed Wall Street’s earnings expectations last year for three consecutive quarters — putting the company in a desperate spot with shareholders as crime rates reach historic highs.
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One common theory for increases in stolen retail goods is the growth of online marketplaces where sales can be made anonymously.
The trend has led many of Target’s competitions, such as Walgreens, CVS, and Walmart, to speak up as well on the need to counter organized retail crime. Retail stores across the country have added safety locks on popular stolen goods.
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Another possible solution pushed by retail companies is government regulation and enforcement through the INFORM Consumers Act passed last year as a part of the omnibus bill. The legal framework allows state attorney generals to require online verification in online marketplaces to counter the sales of stolen and counterfeit goods.
