Target (TGT) Plans to Close Nine Stores & Boost Store Security
Target Corporation TGT recently announced its decision to close nine stores in four states owing to increased instances of theft and organized retail crimes that have affected the workers’ safety and dented its profits significantly. The closing of the stores, which will be effective on Oct 21, includes three stores in Portland, OR, three in the San Francisco Bay Area, two in Seattle and one in New York City.
The company invests significantly in boosting the safety and security of its workers and customers by adding more security workers, hiring third-party guard services and installing theft-deterrent tools such as locking up merchandise. It also provides training to store operators and security team members to de-escalate any potential safety issues.
Despite the retailer’s efforts to improve loss prevention measures, instances of theft and retail crimes soared by 120% in the first five months of the year compared with the year-ago period. This led the company to anticipate an additional theft-related loss of $500 million in the current fiscal year compared with the last fiscal year. The company came up with the decision to close stores due to the above-mentioned challenges.
Target noted that it will still operate more than 150 stores in the markets where the store closures will take place. The company will offer its affected store workers the option to relocate to other locations.
TGT highlighted that it will continue making strong investments in order to prevent theft and organized retail crime incidents, thereby securing the safety of its workers and customers. These include making payroll investments in additional security forces, using theft-deterrent tools and providing training to store workers.
The company will also invest in cyber defense and collaborate with the U.S. Department of Homeland Security’s Homeland Security Investigations division to prevent retail theft and fraud. It will work on developing custom tools for detecting criminal activity and integrating them into in-store and online processes.
Target highlighted that it will cooperate with industry participants and participate in the National Store Walk Month initiative to combat the issues of organized retail crime and theft.
It will collaborate with the national and local retail industry associations, including RILA and the National Retail Federation to fund advocacy and educational initiatives.
What’s More
Target continues to emphasize developing flexible-format stores to penetrate deeper into urban and suburban areas. It opened 23 new stores and completed 140 full-store remodels in fiscal 2022. It plans to open about 20 new stores in a variety of sizes in fiscal 2023. The firm is also investing in approximately 175 of its existing stores, ranging from full remodels to the addition of Ulta Beauty at Target or Apple at Target shop-in-shop experiences or expanded capacity for same-day fulfillment services.
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Shares of this Zacks Rank #3 (Hold) stock have declined by 17.4% in the past three months compared with the industry’s decline of 3.7%.
Key Picks
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Boot Barn is a fashion retailer of apparel and accessories. The company has a trailing four-quarter earnings surprise of 13.5%, on average. The Zacks Consensus Estimate for Boot Barn’s current financial-year sales suggests an increase of 7.8% from the year-ago reported figure.
Brilliant Earth is a designer and seller of precious metals and jewelry in the United States. BRLT has a trailing four-quarter earnings surprise of 83.3%, on average. The Zacks Consensus Estimate for Brilliant Earth’s current financial-year sales suggests growth of 9.2% from the year-ago reported figure.
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