Dick's Sporting Goods cites 'organized retail crime' for 23% profit decline
Dick's said it lost about $74 million in net income in the second quarter of 2023 because of "organized retail crime." Dick's is not alone, as more and more retailers are closing because of mobs of thieves striking stores.
Dick's Sporting Goods said its quarterly profits declined 23% in part due to "organized retail crime," even as sales grew 3.6%.
Dick's, which has more than 700 stores nationwide, told investors Tuesday that it lost about $74 million in net income during the second quarter of 2023 compared to the same time period in 2022.
Among the factors cited for the decline in profits, Dick's listed "organized retail crime and our ability to effectively manage inventory shrink," which is used in the retail industry to refer to lost or stolen merchandise.
Dick's President and CEO Lauren Hobart addressed the loss during an investors call Tuesday.
"Based on the results from our most recent physical inventory cycle, the impact of theft on our shrink was meaningful to both our second-quarter results and our go-forward expectations for the balance of the year," she said, according to the New York Post. The crime wave forced Dick’s to slash its expectations for its share price, down from its previously-issued estimate of $12.90 to $13.80.
Other companies have also faced recent challenges with retail theft. Fortune Magazine reported two years ago that "‘Flash mob’ robberies have become a major threat to retailers like Best Buy and CVS, and it’s a $45 billion-a-year problem."
Walmart decided to shut 17 of its stores across nine states in 2023 after CEO Doug McMillon warned in December that the supermarket may be forced to raise prices or close stores if the shoplifting wave continues. Walgreen's closed five outlets in San Francisco in fall 2021. A worker at Old Navy, which shut down its downtown San Francisco store, told CBS News that "It's really bad because it's downtown San Francisco and it's really out of control."
San Francisco Mayor London Breed, who had previously taken steps to defund the police, has blamed market conditions and profit-seeking for the closures.
The conservative Hoover Institution says that "[California] state law holds that stealing merchandise worth $950 or less is just a misdemeanor, which means that law enforcement probably won’t bother to investigate, and if they do, prosecutors will let it go."