During Target’s second-quarter earnings call, CEO Brian Cornell expressed concern over the increasing violence and danger faced by staffers due to thefts at the retail giant. He revealed that shoplifting incidents involving “violence or threats of violence” had surged by 120% in the first five months of the year. Cornell emphasized that Target’s team continues to encounter an unacceptable amount of retail theft and organized retail crime, and unfortunately, safety incidents related to theft are moving in the wrong direction. He further stated that Target’s inventory shrinkage, which includes losses from retail theft, has exceeded the sustainable level expected for the company.
According to the National Retail Federation, last year’s security survey of approximately 60 retailers revealed an average shrinkage rate of 1.4%, resulting in $94.5 billion in losses. The study highlighted that 37% of shrinkage was due to external theft, including organized shoplifting incidents. Moreover, retailers experienced a 26.5% increase in organized theft incidents on average.
Target’s recent boycotts due to LGBTQ-friendly merchandise played a role in the company’s first quarterly sales drop in six years. However, the fiscal second quarter profit exceeded expectations as the company adjusted inventories to match cautious spending on discretionary items by customers. In addressing the threats faced by staff, Cornell referred to incidents surrounding the sale of LGBTQ-related merchandise during Pride Month. Shoplifting accompanied by violence or threats of violence increased by 120% in the first five months of the year.
Public outrage over the sale of LGBTQ-friendly merchandise resulted in customers vandalizing Pride displays, confronting employees angrily, and posting threatening videos on social media. Target responded by removing certain items from its stores and relocating merchandise to the rear. Cornell reassured investors that the safety of the team and guests is the company’s top priority, emphasizing their denouncement of violence and hate. Despite the losses, Target plans to continue celebrating Pride Month in the future, with future collections focusing on being celebratory, joyous, and relevant. Cornell mentioned the importance of being mindful of timing, placement, and presentation of future Pride collections.
During the earnings call, Target’s CFO, Michael Fiddelke, acknowledged the negative impact of the rainbow-themed collection on traffic and top-line trends. Cornell attributed part of the decline in sales to higher prices for food and household essentials, which cut into customers’ budgets. He explained that customers are choosing to spend their money on experiences like concerts and movies, as well as being more selective in their discretionary shopping.
Target’s earnings for the quarter ending on July 29 amounted to $835 million, or $1.80 per share, compared to $183 million, or 39 cents per share, in the same period last year. Sales decreased by nearly 5% to $24.77 billion due to a shift in consumer focus toward groceries over discretionary items.
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