The retailer Target has blamed organized crime and rampant shoplifting for their decline in profits, claiming such incidents have taken a whopping $1.2 billion this year alone.

In the company’s earnings call on Wednesday, the retailer projected a significant impact on profits amounting to a staggering $500 million this year, attributing it mostly to inventory shrinkage resulting from merchandise theft.

Taking into account an additional $700 million profit decline from inventory shrinkage in 2022, the company is on track to witness a total loss of $1.2 billion in profits.

Target Chairman and CEO Brian Cornell told reporters on Wednesday’s earnings call that the problem is only getting worse:

The unfortunate fact is violent incidents are increasing at our stores and across the entire retail industry. And when products are stolen, simply put they are no longer available for guests who depend on them.

Left unchecked, organized retail crime degrades the communities we call home. As we work to address this problem, the safety of our guests and our team members will always be our primary concern. Beyond safety concerns, worsening shrink rates are putting significant pressure on our financial results.

In recent years, the issue of organized retail crime has escalated, with criminal gangs seeking to obtain goods and sell them at lower prices to consumers amidst a worsening economic climate.

According to a study conducted by the National Retail Federation (NRF) in late 2022, the theft of goods from stores, contributing to inventory shrinkage, resulted in losses across the industry amounting to $94.5 billion in 2021, compared to $90.8 billion in 2020. Meanwhile, approximately 32.8 percent of surveyed companies said that organized retail crime has become a significantly greater concern over the past five years.

“Organized retail crime has been a major concern for the retail industry for decades, endangering store employees and customers, disrupting store operations and inflicting billions in financial loss for retailers and the communities they serve,” said NRF President and CEO Matthew Shay.

He continued:

These concerns have grown in recent years, as criminal groups have become more brazen and violent in their tactics and are using new channels to resell stolen goods. NRF and its members have been forcefully advocating for the ‘Combating Organized Retail Crime Act’ in Congress because it’s time for decisive action, not just platitudes and endless debate.

The problem of shoplifting and organized crime is understood to be most severe in big Democrat-controlled cities such as San Francisco and Chicago. Last month, video posted from a Target store in San Francisco showed how the outlet had placed its entire product range behind security glass.

“Like other retailers, organized retail crime is a concern across our business,” a company spokesperson said at the time. “We’re taking proactive measures to keep our teams and guests safe while deterring and preventing theft.”

“These mitigation efforts include hiring additional security guards, adding third-party guard services at select locations, and using new technologies and tools to protect merchandise from being stolen,” they continued.” We are working with legislators, law enforcement, and retail industry partners to support public policy that would help achieve our goals of creating a safe environment in our stores and keeping our doors open in communities across the country.”