Oh No! It looks Target may be shutting some of its stores as it struggles with falling profits.
Target’s parent company, Wesfarmers, achieved a healthy profit of $5.5 billion. However, it’s discount retailer division didn’t fare as well.
The earnings of Target and Kmart together plummetted $626million last financial year to $540million. That’s a decrease of $86million, according to Wesfarmers most recent full-year financial results. results for the 2019 financial year.
Focus On Quality & Online
Wesfarmers Chief executive Rob Scott spoke to SMH saying:
“Ultimately, it [Target] will be most likely a smaller business over time as we reduce the size of the network and focus more on quality over quantity.”
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Mr Scott also highlighted that the focus of the business will be online shopping rather than physical stores.
‘I think over time, we’ll see e-commerce sales represent a very significant proportion of Target’s total sales,’ he said.
To support this direction, Wesfarmers purchased retailer Catch Group in June this year, saying that this decision was made to assist Kmart and Target with the online side of their businesses.
‘So we see the future is very much about having a high quality store footprint complimented by a world-class digital offer. That’s what we’re building through the investment in Catch.’ Mr Scott said earlier this year.
Which Stores Will Close?
There is yet to be an announcement as to which stores will shut down.
Jim Power, an analyst at Wesfarmers shareholder company Martin Currie, said that he was confident the company would make the right decision as they work out which locations are the most profitable to retain as bricks and mortar stores.
“[Wesfarmers will] work through their footprint, figure out what stores make money and try to work on the footprint as much as the consumer proposition,” he said.
In 2018 the number of Target stores across the country was 305, outweighing the more profitable Kmart at 227 stores, according to Canstar Blue.
Which stores do you think Target will shut down first? And would be upset if it was your local store? Tell us in the comments below.
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