CUSTOMERS have been warned of drastic changes coming to Dollar Tree following the CEO's vow to take a defensive approach against theft.
Rick Dreiling, the CEO of Dollar Tree Inc., which runs Dollar Tree and Family Dollar, has developed "several new shrink formats" that are expected to be rolled out in the final six months of the year.
4
4
"Shrink" often refers to theft and other kinds of inventory losses in the retail industry.
"It goes everything from moving certain SKUs [stock-keeping units] to behind the check stand," said Dreiling during a company earnings call.
It goes everything from moving certain SKUs [stock-keeping units] to behind the check stand,"
Dollar Tree has blamed theft as a contributing factor to its gross margin.
READ MORE DOLLAR TREE
Shrink hit 29.2 percent in the second quarter, marking a 220-basis-point drop year after year.
The company said "lower initial mark-on, unfavorable sales mix … and wage investments in distribution center payroll" has also been a factor.
According to CEO Jeff Davis, shrink "is a sort of a trailing indication because stores are shrinking over the course of the year."
He added that it "takes time" for anti-theft measures to "actually take hold."
Most read in The US Sun
The earnings call came just one day after the CEO of Kohl's, Jill Timm, called shrink an ongoing problem in the retail industry, saying it had "weighted in on our margins."
Similar to Dollar Tree, Timm said Kohl's has taken its own measures to combat the problem.
Some measures include "cabling products to fixtures," only having testers for makeup, and adding more staff in fitting room areas and by the front doors.
Major retailers such as Walmart and Target are also cracking down on organized retail crime.
According to the 2022 edition of the retail security survey from the National Retail Federation, the total losses from shrink increased by about four percent in 2021, totaling $94.5billion.
The survey, which came out in mid-September, said that the losses were "primarily" linked to external theft such as organized retail crime.
Shrink and other factors such as sales mix, increased prices on diesel, ocean freight savings, and more have caused Dollar Tree to update their project for the fiscal year, according to the company.
Dollar Tree projected they would make $30.6billion to $30.9billion for consolidated net sales while diluted earnings per share would be between $5.78 to $6.08.
Davis said that Dollar Tree "see[s] nothing systemic or structural in the current environment that would have a lasting negative implication for the multiyear outlook that we shared in June."
4
4
