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Target CFO: 'Organized retail crime' contributed to hundreds of millions in lost profits in 2022
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Own it Democrats
Mar 1, 2023, 3:30:05 AM3/1/23
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With all due respect to Walgreens CFO James Kehoe, inventory shrinkage
mostly at the hands of organized retail crime is still worth crying over
if you are a retailer.
Take Target (TGT), for example.
"It [inventory shrinkage] was certainly a headwind [last year]," Target
CFO Michael Fiddelke told Yahoo Finance on Tuesday (video above). "We know
we're not alone in seeing elevated levels of shrink and organized retail
crime driving some of that theft."
Fiddelke said the profit impact amounted to "hundreds of millions of
dollars of headwind." The issue is likely to challenge Target's bottom
line in 2023, he added.
Goods stolen from stores, which contributes to inventory shrinkage, led to
$94.5 billion in losses in 2021, up from $90.8 billion in 2020, according
to a late 2022 study by the National Retail Federation (NRF).
About 32.8% of retailers surveyed called out organized retail crime as
becoming "much more" of a concern in the last five years.
The increased amount of theft has caused retailers to take additional
measures, such as hiring more security guards and locking up easy-to-
shoplift items, notably household essentials such as toothpaste.
“These highly sophisticated criminal rings jeopardize employee and
customer safety and disrupt store operations," Mark Mathews, NRF vice
president for research development and industry analysis, wrote in the
report. "Retailers are bolstering security efforts to counteract these
increasingly dangerous and aggressive criminal activities."
While Target and other retailers are still pulling out all the stops to
prevent organized retail theft in their stores, Walgreens (WBA) appears to
be over the matter.
During an early January earnings call, Walgreens' Kehoe said inventory
shrinkage was down to about "mid-twos" in terms of a percentage of sales.
In 2022, the number was closer to 3.5%.
"Maybe we cried too much last year when we were hitting numbers that were
3.5% of sales," Kehoe crowed. "We've put in incremental security in the
stores in the first quarter. Actually, probably we put in too much, and we
might step back a little bit from that."
Send those security folks over to Target, James.
Brian Sozzi is Yahoo Finance's Executive Editor. Follow Sozzi on Twitter
@BrianSozzi and on LinkedIn.
<https://finance.yahoo.com/news/target-cfo-organized-retail-crime-
contributed-to-hundreds-of-millions-in-lost-profits-in-2022-
193453387.html>
mostly at the hands of organized retail crime is still worth crying over
if you are a retailer.
Take Target (TGT), for example.
"It [inventory shrinkage] was certainly a headwind [last year]," Target
CFO Michael Fiddelke told Yahoo Finance on Tuesday (video above). "We know
we're not alone in seeing elevated levels of shrink and organized retail
crime driving some of that theft."
Fiddelke said the profit impact amounted to "hundreds of millions of
dollars of headwind." The issue is likely to challenge Target's bottom
line in 2023, he added.
Goods stolen from stores, which contributes to inventory shrinkage, led to
$94.5 billion in losses in 2021, up from $90.8 billion in 2020, according
to a late 2022 study by the National Retail Federation (NRF).
About 32.8% of retailers surveyed called out organized retail crime as
becoming "much more" of a concern in the last five years.
The increased amount of theft has caused retailers to take additional
measures, such as hiring more security guards and locking up easy-to-
shoplift items, notably household essentials such as toothpaste.
“These highly sophisticated criminal rings jeopardize employee and
customer safety and disrupt store operations," Mark Mathews, NRF vice
president for research development and industry analysis, wrote in the
report. "Retailers are bolstering security efforts to counteract these
increasingly dangerous and aggressive criminal activities."
While Target and other retailers are still pulling out all the stops to
prevent organized retail theft in their stores, Walgreens (WBA) appears to
be over the matter.
During an early January earnings call, Walgreens' Kehoe said inventory
shrinkage was down to about "mid-twos" in terms of a percentage of sales.
In 2022, the number was closer to 3.5%.
"Maybe we cried too much last year when we were hitting numbers that were
3.5% of sales," Kehoe crowed. "We've put in incremental security in the
stores in the first quarter. Actually, probably we put in too much, and we
might step back a little bit from that."
Send those security folks over to Target, James.
Brian Sozzi is Yahoo Finance's Executive Editor. Follow Sozzi on Twitter
@BrianSozzi and on LinkedIn.
<https://finance.yahoo.com/news/target-cfo-organized-retail-crime-
contributed-to-hundreds-of-millions-in-lost-profits-in-2022-
193453387.html>
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