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Target estimates 'organized retail crime' could cost company $600 M

Earns Target
Posted at 3:37 PM, Nov 16, 2022
and last updated 2022-11-16 16:41:03-05

Target's CFO Michael Fiddelke revealed that it wasn't just inflation that was driving down profits for the company, it's also believed to be theft as well.

In a recent earnings call, Fiddelke pointed to "organized retail crime" for the huge chunk of profit losses the company has seen this year.

"At Target, year-to-date, incremental shortage has already reduced our gross margin by more than $400 million vs. last year," Fiddelke said.

"We expect it will reduce our gross margin by more than $600 million for the full year," he said.

Fiddelke said there are a "handful of things that can drive shrink in our business and theft is certainly a key driver. We know we're not alone across retail in seeing a trend that I think has gotten increasingly worse over the last 12 to 18 months. So we're taking the right actions in our stores to help curb that trend where we can, but that becomes an increasing headwind on our business and we know the business of others."

A spokesperson confirmed to Yahoo! Finance that Target believes the losses are specifically attributed to "organized retail crime."

Yahoo Finance Editor-in-Chief Andy Serwer blamed the issue on people not "getting a fair shake" when talking about why there is theft of products.

Serwer said, "To some degree it’s a reflection of our times. Simply put, America’s social contract is straining."

Target said in a third quarter earnings report that comparable sales for the company had increased by 2.7 percent, and the company saw 12.7 percent growth last year.