Retail giant Target reported another quarterly profit loss Wednesday, and gave a cautious outlook for the rest of the year.
The Minneapolis-based company estimated in its earnings release that losses, driven primarily by organized crime, could result in a whopping $1.2 billion hit to its bottom line this year. The announcement comes after Target estimated losses of $700 million to $800 million from theft last year.
Retailers have faced a rash of thefts in recent months, with some companies, like Walmart, closing down "underperforming" stores in areas of high crime. Others have turned to locking up many everyday items to prevent them from being stolen. But that too has negatively impacted sales.
Merchandise stolen from stores led to more than $94 billion in losses in 2021, up from $90.8 billion the previous year, according to a study by the National Retail Federation. A majority of retailers also reported that offenders are "somewhat more" or "much more" violent.
"While there are many potential sources of inventory shrink, theft and organized retail crime are increasingly important drivers of the issue," Target CEO Brian Cornell said in a statement. "We are making significant investments in strategies to prevent this from happening in our stores and protect our guests and our team."
Target didn't mention any plans to close down stores in high-crime areas but did say it is focused on managing the financial impact theft has on the business.
"We are maintaining our full-year financial guidance, based on the expected benefit from efficiency and cost-savings efforts and our team's continued focus on agility, flexibility and retail fundamentals in the face of continued challenges including inventory shrink," Cornell added.
Despite those losses, the company reported a 0.5% growth in sales over the first three months of 2023 and a nearly 1% growth in traffic, which was attributed to new store locations.
Target's shares were up about 2.5% during midday trading Thursday.
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