Retailers Have a Growing Theft Problem

Alarm Bells Ringing

Major retailers are sounding the security alarm over a widespread issue: theft.

Some companies, including Foot Locker (FL), are even blaming underwhelming quarterly earnings on shoplifting.

Some stores have seen a parallel spike in store credit card delinquencies. Macy’s (M) reported a $84 million loss last quarter stemming from customers failing to pay credit cards.

Rising Losses

In recent years, Walgreens (WBA) issued several warnings to investors about rising theft in its stores, and even unveiled a radical shoplifting-proof store redesign in one location. Others, including Target (TGT), CVS (CVS), and Dick’s Sporting Goods (DKS) have all mentioned similar concerns.

Dick’s CEO Lauren Hobart said “elevated inventory shrink” during the company’s earning report and called it “an increasingly serious issue impacting retailers.” The sports retailer blamed theft for falling short of its second-quarter earnings expectations.

Organized Theft

Shoplifting is not limited to misguided teenagers making bad decisions. According to the National Retail Federation, retail theft has grown in both scale and complexity. Modern retail theft rings can involve dozens of people and incorporate careful planning and targeting. Stolen goods can then be repackaged and sold for profit.

All this comes at a bad time for the retail sector, which is already struggling with rising labor costs and consumers who have endured rising prices on items across the board.

Whether retail theft is just an easy scapegoat for other headwinds remains to be seen.

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