Lots of big retailers this summer are talking about theft, and how it’s hurting profit. But when an analyst asked department-store chain Nordstrom Inc. JWN, -4.38% about the subject on Thursday, following a massive late-afternoon robbery at one of its stores this month in California, executives said levels of theft haven’t been beyond what they expected.
“Certainly what happened at our Topanga store is disturbing to all of us,” Chief Executive Erik Nordstrom said on the retailer’s earnings conference call on Thursday, referring to the robbery, at the Westfield Topanga shopping center northwest of Los Angeles. “The loss is a concern. Losses from theft are at historical highs. We find it unacceptable and it needs to be addressed.”
“That being said, while it’s unacceptable, it is within our plans,” he said. “We have not seen continuing rising of shrinkage that has exceeded what we plan. So it’s in line with how we laid out this year.”
Within the retail industry, “shrinkage,” or “shrink,” refers to losses of items attributed to theft, fraud or employee error. Different retailers calculate the metric differently. Items like beauty products, power tools, shoes and clothes are often easier targets.
Organized retail theft has become a more common subject on the earnings calls of the nation’s biggest retailers. But others say the data on the issue is far more subjective than what bold headlines in the news might indicate.
The Los Angeles Police Department estimated that 30 to 50 people participated in the Topanga heist this month, armed with bear spray and taking off in cars without license plates, according to the Los Angeles Times. That store suffered a similar incident in 2021, the Times said.
Executives at retailers like Dick’s Sporting Goods Inc. DKS, +2.16% said this week that the level of “shrink” had surprised them, but efforts to sell off their stockpiles of unwanted goods were a bigger impact on margins. Dollar Tree Inc. DLTR, -12.90% also said that shrink hit margins.
When asked about the subject last week, the nation’s biggest retailer, Walmart Inc. WMT, -0.77%, suggested it was complicated.
“Shrink has increased a bit this year,” John Furner, CEO of Walmart U.S., said on the company’s earnings call. “It’s increased last year. It’s uneven across the country, it’s not in every market. Some markets are higher than others.”
Chief Executive Doug McMillon added: “Shrink is comprised of more than one thing.”
James Rogers contributed.