With Dick’s Sporting Goods on Tuesday saying rampant theft is seriously impacting its bottom line, a leading retail advocate for Massachusetts estimated that local businesses are losing about $2 billion a year to “organized criminal theft activity.”
Dick’s Sporting Goods reporting that its profit slipped in its second quarter and blaming theft at its stores “is not surprising,” Retailers Association of Massachusetts President Jon Hurst told the Herald.
“A number of companies have reported the effect of this organized criminal theft activity on their bottom line,” Hurst added. “We’ve certainly seen more of this organized stealing, and this smash-and-grab.
“Stores have actually closed,” he said. “You can only keep a store open for so long when you’re losing money on it.”
For the second quarter that ended July 29, Dick’s earned $244 million, or $2.82 per share. A year earlier, the company earned $319 million, or $3.25 per share. Analysts polled by FactSet predicted earnings of $3.81 per share.
“While we posted another double-digit EBT margin (earnings before income taxes margin), our Q2 profitability was short of our expectations due in large part to the impact of elevated inventory shrink, an increasingly serious issue impacting many retailers,” Dick’s President and CEO Lauren Hobart said in a statement on Tuesday.
In Massachusetts alone, organized criminal theft activity costs retailers about $2 billion a year, according to estimates.
“Criminal gangs prey on stores, going from New York City up the coast to Boston and to Portland,” Hurst said.
“It happens all the time where stores are targeted,” he added. “It isn’t just the big chains; they also hit mom-and-pop stores, stealing jewelry, watches, designer items.”
Local elected officials must step up and address this problem for retailers, Hurst emphasized.
“Politicians need to start taking it seriously, and everybody needs to work together,” he said. “The lawmakers, the police, and the prosecutors have to work on this. They have to prosecute these bad actors who are doing this for a living, and put them behind bars.”
In 2018, the state Legislature in a bill increased the felony threshold for larceny from $250 to $1,200.
“That was a big mistake,” Hurst said. “That created low-risk, high-return criminal activity. If the individuals keep their stealing efforts per crime per store down below $1,200, then it’s a misdemeanor and DAs won’t even prosecute that misdemeanor, which is part of the problem.”
Meanwhile, police departments have been understaffed over the last few years.
“We need more police officers and investment into catching these criminals,” Hurst said.
Herald wire services were used in this report.