Wednesday, February 28, 2024

Target Stock Plummets as Retail Theft Surges, Wiping Out $30 Billion in Value

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Target Corporation has faced an increasingly dire situation in 2023, with its stock price plummeting nearly 40% amid rampant retail theft and organized crime hitting its bottom line.

The retail giant, which operates close to 2,000 stores across the U.S., has seen profits plunge as theft, violence, and other illegal activity targeting its locations escalate dramatically this year. By late October, Target’s market capitalization had dropped by over $30 billion in just six months, presenting a growing crisis for the company.

Surging Theft Slams Target’s Sales and Profits

In May 2023, Target first warned investors that it expected up to $1.3 billion in theft-related losses for the year, a massive jump from the $600 million hit it took in 2021. The retailer stated theft was the primary reason its operating margin would fall from over 8% to just 6% in 2022.

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By August, the situation had deteriorated further, with Target reporting a 90–120% increase in theft coupled with violence across many stores. Brazen shoplifting incidents increased as organized retail crime syndicates repeatedly targeted locations to steal merchandise in bulk to resell online.

With sales plunging, Target announced in September that it would close at least six San Francisco stores in locations hit especially hard by rampant shoplifting, costing hundreds of workers their jobs.

Nationwide, the company has now shuttered at least 9 total stores that experienced excessive theft, shoplifting, and security incidents, hoping to stem losses that have badly damaged its bottom line.

Target Share Price Hammered Amid Growing Crisis

Target’s stock price has plunged in tandem with its worsening retail theft troubles, as investors panic over the issue ravaging margins and profits.

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The company’s share price sat at nearly $170 in early May 2022, before Target first revealed its massive projected theft losses. By late October, shares had cratered to around $106 — a drop of over 35%.

In total, Target shed over $30 billion in market capitalization — From a high of $80 billion to under $50 billion by late 2022.

The stock now sits just above a 3-year support level at around $105, dangerously close to falling further towards the next support near $90 if the retail theft crisis can’t be controlled.

Can Target Overcome The Growing Threat?

Target is scrambling to contain the spiraling shoplifting epidemic hammering its sales and stores. But the retailer faces an uphill battle as organized theft rings continue to relentlessly exploit vulnerabilities across numerous locations.

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The company has increased security staffing, closed at-risk stores, and lobbied for legislative deterrents to the rampant retail crime wave.

But with the faltering economy exacerbating theft incentives and police strained to prosecute cases, analysts aren’t optimistic the situation will turnaround soon.

Target may be stuck dealing with the growing scourge of retail theft for years to come, while struggling to keep its margins and stock price from sinking even further into the red.

Be sure to follow our business news section for the latest updates as Target and other major retailers grapple with the growing crisis of organized retail crime threatening their operations.

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Mezhar Alee
Mezhar Alee
Mezhar Alee is a prolific author who provides commentary and analysis on business, finance, politics, sports, and current events on his website Opportuneist. With over a decade of experience in journalism and blogging, Mezhar aims to deliver well-researched insights and thought-provoking perspectives on important local and global issues in society.

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