Retailer Dollar General is expecting major financial losses in its most recent quarter, which it is attributing to retail theft.
The retailer's gross profit fell 126 basis points compared to last year, which Dollar General has attributed to "lower inventory markups and increased shrink," with shrink being a retail term to describe the loss of inventory through various means, such as theft. "Markdowns and inventory damages" were also cited as a factor in the retailer's losses.
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"The shrink environment has continued to worsen," Dilts said Thursday during the company's second-quarter earnings call. "We now expect approximately $100 million of additional shrink headwind since last quarter's call."
The most recent quarter lasted for three months and ended on Aug. 4.
Dilts has warned that the retailer is expecting its pressure from retail theft will continue and that inventory shrink will increase in the second half of 2023. However, some precautions will be taken to combat this problem, including "reducing our inventory position" and "improving execution in our stores."
Retail theft has been a growing problem within the United States. Retail giant Dick's Sporting Goods saw its profits plummet 23%. Due to these losses in profits, Dick's shares fell 24%.
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Los Angeles launched a task force earlier this month to combat the unprecedented rise of organized retail crime thefts across the region. The force will include law enforcement agencies from multiple Southern California areas, including the Los Angeles Police Department, Los Angeles Sheriff's Department, agents from the U.S. Marshals Apprehension Task Force, and the FBI Apprehension Task Force, Mayor Kim Bass announced Thursday.
The task force was formed less than a week after 30 masked robbers dressed in black and gray stormed a Nordstrom department store, taking designer purses, entire clothing racks, and jewels. The thieves also dragged display cabinets still attached to expensive accessories, shattered glass cases, and yanked apart shelving.