According to its first-quarter 2023 earnings report released on Wednesday, last year's losses due to "inventory shrink" and criminal activity had already reached $400 million by November, indicating that 2022's figures could have surpassed $1 billion.
Inventory shrink is an industry term used to measure the extent to which fewer products are available on store shelves compared to the quantities reported in the company's inventory catalog.
"In looking ahead, we anticipate that shrink will impact this year's profitability by more than $500 million compared to last year," stated Target in its official statement. "While there are multiple potential causes of inventory shrink, theft and organized retail crime have become increasingly significant factors contributing to this issue."
Consequently, company executives have turned their attention towards "making significant investments in strategies" aimed at preventing further losses resulting from criminal activities that erode their profit margins.
An employee from a Target store in downtown San Francisco disclosed to local media that they experience at least ten instances of theft per day.
"If you look in any corner of the store, you'll see people hastily stuffing items into a bag, such as food and cosmetics," the employee said.
As a result, even low-cost items like shampoo, deodorant, toothbrushes, and snacks are now kept behind locked plastic cases.
Target's first-quarter earnings per share declined by nearly five percent, dropping from $2.16 per share to $2.05. Nonetheless, the company's executives expressed optimism that the half-billion-dollar loss will not lead to store closures or hinder their plans to hire additional staff.
As of 2023, Target operates 1,948 locations throughout the United States alone and is ranked 32nd on the 2022 Fortune 500 list of the largest U.S. corporations.
The company is the seventh largest retailer in the country, and although its losses are significant, its reported revenue for the last fiscal year surpassed $109 billion.
"Our focus remains on making long-term investments in our stores, supply chain, and team, positioning Target for profitable growth and increased market share in the years to come," stated the earnings report.
Despite its ongoing issue with crime, Target managed to achieve an overall sales increase of 0.5% over the past year.
Furthermore, the mega-store announced plans to expand by approximately 40 stores across the country's most populous states, including California, New York, Florida, and Texas, in the upcoming years.
