How crime is priced

Dick’s also said its second-quarter results were affected by “inventory shrink,” which refers to the loss of inventory due to factors such as employee theft, shoplifting, and others. The company’s merchandise margin declined by 2.54 percentage points—one third of that was because of shrink, the company said.

“The biggest impact in terms of the surprise for Q2 primarily came from shrink,” said Navdeep Gupta, chief financial officer. “We thought we had adequately reserved for it. However, the number of incidents and the organized retail crime impact came in significantly higher than we anticipated.”

Barrons