Not even Dollar Tree is safe from the increasing theft! Budget retailer blames 2.2% profit drop on crime and damage – and says it will now be forced to lock down its products or stop selling them altogether
- Dollar Tree CEO Richard Dreiling and CFO Jeffrey Davis blame the company’s 2.2% year-over-year profit decline to $4.37 billion on theft
- Dreiling announced that due to the growing problem, products in Dollar Tree stores will have to be closed
- Other retailers such as Dick’s and Target have been hit hard by theft, with millions in losses recently
Dollar Tree has blamed its poor third-quarter results on theft, while the budget retailer joins Dick’s Sporting Goods and Target in highlighting the problem of shrink.
Dollar Tree CEO Richard Dreiling and CFO Jeffrey Davis blame the company’s 2.2% annualized drop in earnings to $4.37 billion on theft.
Davis told Wall Street analysts on an earnings call Thursday that such stock losses “have definitely progressed a little further than we expected.”
Dreiling subsequently announced that due to the growing problem, products in Dollar Tree stores will have to be locked up.
“We’re taking a very defensive approach to shrinkage right now,” Dreiling said.
Dollar Tree CEO Richard Dreiling and CFO Jeffrey Davis blame the company’s 2.2% year-over-year profit decline to $4.37 billion on theft
Images of blatant thefts at Dick’s stores across the country have been circulating on social media in recent months
“We have several new shrink formats that we’re introducing in the second half of the year, ranging from moving certain SKUs to behind the counter.
“It has to do with the fact that some things are locked. And even to the point where some stores can’t keep a certain SKU on their shelves and just discontinue the item,” he added.
Dollar Tree’s share price fell nearly 13% on the news, remaining more than 16% lower than the same period last year.
Other retailers have been hit hard by theft, according to recent earnings reports.
Dick’s Sporting Goods blamed the contraction on a 23 percent profit drop and warned that the situation was only getting worse.
Dick’s reported net income for the three-month period ended July 29 of $244 million, or $2.82 per share, compared to $318.5 million, or $3.25 per share, for the same period last year.
Shares of the retail giant fell more than 24 percent after earnings announcements on Tuesday.
A Target employee locks up one of the closets of men’s deodorant, Dollar Tree has warned it will also lock up goods
Major US retailers have been forced to close stores over millions of dollars in losses as rampant theft plagues major stores across the country
“Our second-quarter profitability fell short of our expectations, largely due to the impact of increased inventory shrinkage, an increasingly serious problem affecting many retailers,” CEO Lauren Hobart said in a statement.
This was the first reference in nearly two decades that the company has referred to “shrink” in an earnings call or press release.
Chairman Ed Stack blames a third of the company’s margin decline on contraction and warned that things are expected to get even worse.
‘It’s been moved. It’s gone up a little bit,” Stack told CNBC about the rise in store theft.
“We expect it to get even a little worse. In the second half of the year we took a little more reserve for this.
“Only because what we see happening with organized retail crime is grab and gos,” Stack said in an interview.
“We think we’re doing our best to contain this with the security we have in the stores, working with local authorities.”
Just a month later, Target announced it was expected to lose $500 million a year to violent shoplifters.
The retailer made the shocking announcement during an earnings call in May.
“The unfortunate fact is that violent incidents are on the rise in our stores and across the retail industry,” CEO Brian Cornell said on the call.
“Unchecked, organized retail crime degrades the communities we call home. As we work to address this issue, the safety of our guests and our team members will always be our primary concern,” he added.