Target Corp. is closing nine stores in four states to stem losses from rising retail theft.
(Bloomberg) — Target Corp. is closing nine stores in four states to stem losses from rising retail theft.
One Manhattan location will be shuttered, along with two in Seattle, three in Northern California and three in Portland, Oregon, Target said in a statement Tuesday. The stores will close Oct. 21.
“We cannot continue operating these stores because theft and organized retail crime are threatening the safety of our team and guests, and contributing to unsustainable business performance,” the retailer said. “We know that our stores serve an important role in their communities, but we can only be successful if the working and shopping environment is safe for all.”
Target has been fuming on its earnings calls for more than a year about losses from theft, which are adding pressure on its slender profit margins. The company says organized retail crime is spurring an increase in shrink, an industry term for inventory losses from external and internal theft, damage and administrative error. In May, Chief Financial Officer Michael Fiddelke said the blow from shrink would be $500 million worse this year than last year.
The shares fell 2.5% at the close in New York. In addition to crime, Target has also been struggling with weakening demand for discretionary goods such as apparel, toys and home furnishings. The company’s stock price has fallen more than 25% this year after a 36% drop in 2022.
Separately, the National Retail Federation said earlier Tuesday that US retailers are closing stores, cutting hours and changing product selections because of an increase in crime. Total losses from shrink edged up to 1.6% of sales last year, the NRF said, versus 1.4% in 2021. However, last year’s rate was in line with the numbers from 2019 and 2020.
Target isn’t the only retailer to complain about rising theft. Nordstrom Inc. and Dick’s Sporting Goods Inc. are among the companies that have cited profit headwinds from retail crime in recent earnings reports.
Walmart Inc. warned last year that worsening theft could prompt store closings and recently shuttered its Portland stores, spurring speculation in the local press that rising shoplifting was one of the forces behind the move. Walmart also closed half its stores in Chicago this year, although it said crime wasn’t a leading driver of that decision.
Judging from Target’s store closings, crime is hitting some areas more than others. The company said it made significant investments in the nine locations to deter theft, including beefed-up security staffing and other measures. But that wasn’t enough to control “fundamental challenges to operating these stores safely and successfully.”
The company said it would work with employees at the shuttered stores to offer transfers to other locations. Target will still have more than 150 locations in the four affected markets. The retailer has a nationwide footprint of almost 2,000 stores.
Looking ahead, Target said it would continue to combat theft and organized crime by making investments in key areas. Those efforts include increasing security staff, boosting training for store leaders and security personnel to de-escalate dangerous situations, and “on a limited basis” putting some merchandise behind lock and key.
The company is also partnering with law enforcement and advocating legislation in Congress that would create a task force of federal agencies to crack down on organized retail crime.
Target plans to close the following stores:
- 517 E. 117th St.
- 4535 University Way NE
- 1448 NW Market St.
- San Francisco: 1690 Folsom St.
- Oakland: 2650 Broadway
- Pittsburg: 4301 Century Blvd.
- 939 SW Morrison St.
- 3031 SE Powell Blvd.
- 4030 NE Halsey St.
(Updates with complaints from other retailers in seventh paragraph)
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