Thefts at Target have become increasingly violent and dangerous for staffers, the retail giant’s CEO told investors on Wednesday.
Shoplifting that included “violence of threats of violence” surged 120% during the first five months of the year, said Brian Cornell, chief executive of the Minneapolis-based big-box chain.
“Our team continues to face an unacceptable amount of retail theft and organized retail crime,” Cornell said during the company’s second-quarter earnings call. “Unfortunately, safety incidents associated with theft are moving in the wrong direction.”
Cornell said that Target’s inventory shrink — which accounts for retail theft and other losses of merchandise — is “well-above the sustainable level where we expect to operate over time.”
The National Retail Federation, the nation’s largest retail trade group, said its latest security survey of roughly 60 retailers found shrink clocked in at an average rate of 1.4% last year, representing $94.5 billion in losses.
The greatest portion of shrink — 37% — came from external theft, including products taken during organized shoplifting incidents, the trade group said.
It also noted retailers, on average, saw a 26.5% uptick in organized theft incidents last year.
Target reported its first quarterly sales drop in six years — contributed in part by the calls to boycott the brand over the LGBTQ-friendly merchandise.
Profit for the fiscal second quarter came in above expectations, however, as Target brought inventories closer in line with cautious spending on discretionary items by customers.
Cornell also addressed the threats to staffers in the wake of the controversy surrounding the sale of LGBTQ-related merchandise during Pride Month.
In May, customers knocked down Pride displays at some stores, angrily approached workers and posted threatening videos on social media from inside the stores.
The backlash, which included calls to boycott the company over its sale of “tuck-friendly” bathing suits, prompted Target to remove some items from its store and even relocate the merchandise to the rear of the locations.
“We denounce violence and hate of all kinds, and safety of our team and our guests is our top priority,” Cornell told investors during Wednesday’s earnings call.
Despite the losses, Target will still be celebrating Pride Month in 2024, Cornell said, noting that future collections will focus on being “celebratory and joyous, with wide-ranging relevance.”
Target will also be “mindful of timing, placement and presentation” of its future Pride collections, Cornell added.
“Pride is one of many heritage moments that are important to our guests and our team, and we’ll continue to support these moments in the future.”
Target’s CFO Michael Fiddelke addressed Target’s disastrous rainbow-clad collection in an earnings call on Wednesday, saying: “Traffic and top line trends were affected by the reaction to our Pride assortment.”
Cornell said higher high prices for food and household essentials are taking a bigger chunk out of the paychecks of customers, who have also pulled back on buying some goods in favor of travel or spending time out of the house in other ways.
“Guests are out at concerts,” Cornell told reporters on a media call Tuesday.
“They’re going to movies. They’ve seen ‘Barbie.’ They’re enjoying those experiential moments, and they’re shopping very carefully for discretionary goods.”
Target earned $835 million, or $1.80 per share, in the quarter that ended July 29. That compares with $183 million, or 39 cent per share, in the year-ago period.
Sales fell nearly 5% to $24.77 billion as shoppers focused more on groceries than discretionary items.
Additional Reporting by Shannon Thaler and Post Wires
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