The Real Drag On Retail Profits This Year?
Main reasons retailers are posting weaker profits have nothing to do with theft

CNBC analysis found losses from retail crime "pale in comparison to other factors."

CNBC counted nearly two dozen retailers that said in recent weeks that shrink is weighing on this year's earnings. The outlet took a closer look at seven of them: Lowe's, Target, Macy's, Dick's Sporting Goods, TJX, Ulta, and Dollar Tree.

The outlet examined financial statements and other public records to estimate the level of shrink for each and compared it to other merchandising factors that also lead to slimmer profit margins, such as discounts and promotions, excess inventory liquidation, or weather-related damages.

Merchandising decisions can have a bigger impact on profit than retail theft

Lowe's has not been among those complaining, but CNBC estimated the company lost nearly $1 billion to inventory shrink last year, with losses of "live goods damaged by unseasonable weather" representing about half of the increase from the year before.

Target made headlines when CEO Brian Cornell said his company would see over $1.2 billion in shrink this year, up from $753 million in 2022. But even that increased figure is a third of the $3.66 billion in losses CNBC tallied for Target's merchandising moves in 2022 including promotions, markdowns, and clearances, as well as higher merchandise and freight costs.

Dick's Sporting Goods cited an "alarming" rise in retail crime as responsible for one-third of the decline in merchandise profits for the last quarter. But CNBC estimates second-quarter shrink of $27.1 million was just half as large as the hit Dick's took from a $54.8 million inventory liquidation during that period.

The outlet goes into further detail with other retailers, but the story is largely similar: inventory shrink in general - and retail crime in particular - received a disproportionate share of attention in earnings calls (and media coverage) relative to other managerial and operational factors that had a larger impact on profits. businessinsider.com


America's Malls Surging Back?
A Mall Owner's About-Face: Bet on America's High-End Malls

Unibail-Rodamco-Westfield will hold some of its top-performing malls but still plans a 'radical reduction' of its U.S. exposure

The European owner of Westfield malls is pulling back from its aggressive plan to sell nearly all its properties and exit from the U.S. market this year, another vote of confidence for the high-end mall business.

Unibail-Rodamco-Westfield said last year that it planned to shed most of its American portfolio by the end of 2023. Now, the Paris-based company intends to hold some of its top-performing malls beyond that self-imposed deadline.

Chief Executive Jean-Marie Tritant told investors this summer that "our strong operational performance gives us flexibility on when we'll execute" future sales.

Europe's largest mall operator still plans a "radical reduction" of its American exposure, Tritant said. Though for now, the company continues to own 16 American malls, including flagships such as Westfield Century City in Los Angeles and Westfield Garden State Plaza in northern New Jersey. It is even investing significant money into some of the malls that the firm was expected to have dumped by now.

Enclosed malls were hit hard by the pandemic and recovered slowly. Older, low-end malls have plummeted in value, but many of the country's well-located, high-end centers are now doing well. Major mall operators, including Simon Property Group and Macerich, have reported strong tenant demand this year.

Some of the malls that Unibail has held on to are also doing well. Occupancy at its flagship properties has reached 2019 levels, the company said, and customer foot traffic and tenant sales were both up in the first half of this year compared with the same period in 2022. wsj.com


Retail Stores Being Used to Launder Drug Money - Cartels?
DOJ: Five Men Charged with Using New York Diamond District Companies as Fronts to Illegally Move More Than $600 Million
NEWARK, NJ. - Five men who work in New York City's Diamond District were arrested today and charged with illegally processing more than $600 million through unlicensed money transmitting businesses, U.S. Attorney Philip R. Sellinger announced.

Raj Vaidya, 26; Rakesh Vaidya, 51; Shrey Vaidya, 23; and Neel Patel, 26, all of Edison, New Jersey; and Youssef Janfar, aka "Joe Rodeo," 57, of Great Neck, New York, are each charged by complaint with one count of operating and aiding and abetting the operation of an unlicensed money transmitting business.

Since 2019, Raj Vaidya, Rakesh Vaidya, Shrey Vaidya, and Patel have operated numerous purported diamond, gold, and jewelry companies in New York City's Diamond District, including Arya Diamond Jewellery USA Inc., d/b/a "Karats & Carats," Diamspark LGD LLC, Royal Diamonds LLC, Raj Gold and Diamond LLC, Royal Arya Jewellery Inc, and Raj Gold and Diamond Inc. Janfar also purportedly operated companies in the Diamond District, including Rodeo of NY, d/b/a "Sarah Jewels." The defendants used these and other entities as fronts to conduct hundreds of millions of dollars in illegal financial transactions for customers - including converting cash to checks or wire transfers - in exchange for substantial fees. At times, they moved millions of dollars in cash in a single day.

This effort is part of an Organized Crime Drug Enforcement Task Forces (OCDETF) operation. justice.gov

Editor's Note: Over the years the DEA has busted multiple retail stores in the Los Angeles Fashion District on two separate occasions laundering millions for the drug Cartels.


Store Closures & Culture Wars Fueling Negative Retail Perception?
Retail, pharmaceutical industries take perception hit: Gallup poll
The retail and pharmaceutical industries have taken a hit amid culture war battles over the past two years, according to new polling released Wednesday by Gallup.

Only 36 percent of Americans hold a positive view of the retail industry, down from 47 percent in 2022, according to data from Gallup. The closings of stores in the wake of the pandemic have contributed to the slide, Gallup said.

"Over the past year, major U.S. retailers took center stage in the culture wars, while also making news for closing big-city stores and putting more merchandise behind locked glass, in response to what retailers are describing as an increase in organized retail crime," Gallup analysis of the data read.

Separately, 18 percent of Americans hold a positive view of the pharmaceutical industry, down from 25 percent in 2022. thehill.com


Retail Sales Grew Again in August Despite Slowing Economy
Retail sales rose in August as parents shopped for school supplies and other goods even as inflation continued and interest rates remained high, the National Retail Federation said today.

"August retail sales show that consumers remain steadfast in the face of continued inflation and higher interest rates," NRF President and CEO Matthew Shay said. "Consumers are focused on household priorities, as evident by spending this back-to-school season. Entering the fall, we expect moderate growth to continue despite uncertainties like the direction of inflation and interest rates as well as a potential government shutdown." nrf.com


US holiday sales set for slowest year since 2018 as consumers turn frugal, report says

Walmart adds nighttime hours, real-time texting to Express Delivery

91% Surge in Ransomware Attacks
Visa Says Ransomware Attacks Reach Record-Breaking Numbers
Ransomware attacks reached record-breaking numbers in March 2023, with a 91% increase compared to the previous month, according to Visa. Compared to the same period in 2022, ransomware attacks increased by 62%, the digital payments firm said in a Thursday (Sept. 7) press release.

Exploited vulnerabilities and compromised credentials were identified as common causes of ransomware attacks, according to the release. These attacks target any accessible data, including payment information and personal identifiable information.

Another growing fraud scheme is enumeration attacks, the release said. Enumeration attacks continue to impact merchants and consumers, with the number of attacks seeing a 40% increase over the previous six months.

Online merchants are becoming a bigger target, accounting for 58% of total fraud and breach investigations, per the release. Brick-and-mortar merchants made up 20% of investigations.

Retail-specific fraud schemes, such as false, spoofed or counterfeit merchants, have seen an uptick in the past six months, according to the press release. These fraudulent merchants steal customers' payment account information without fulfilling orders.

Visa has also observed a rise in "malvertising," where fraudulent merchants establish websites to take customer orders but fail to deliver the goods or services while stealing payment account information, the release said.

Another emerging scam in the retail space is the "free gift" scam, which targets victims with a pop-up window offering a free gift, per the release. Clicking on the pop-up window executes a malicious payload, allowing fraudsters to authorize cryptocurrency transfers from victims' wallets.

Visa proactively blocked $30 billion in fraudulent transactions from January to June, according to the press release. pymnts.com


Defend Your Enterprise Against Microsoft Teams Phishing
Microsoft Teams phishing: Enterprises targeted by ransomware access broker
"Because Storm-0324 hands off access to other threat actors, identifying and remediating Storm-0324 activity can prevent more dangerous follow-on attacks like ransomware," the researchers warned, and provided protection advice and hunting queries for enterprise defenders.

Microsoft previously said that the Microsoft Teams vulnerability that allows these attacks "did not meet the bar for immediate servicing."

But enterprise admins can take steps to minimize this threat, such as making it impossible for external tenants to contact their employees or change the security settings to only allow communication with certain allow-listed domains. (The latter won't help if an external tenant that's allowed to reach out has been compromised.)

Microsoft also notes that it has rolled out several improvements to better defend against these threats.

Aside from suspending identified accounts and tenants associated with inauthentic or fraudulent behavior, they have also enhanced the Accept/Block experience in one-on-one chats within Teams, "to emphasize the externality of a user and their email address so Teams users can better exercise caution by not interacting with unknown or malicious senders."

Also, there are "new restrictions on the creation of domains within tenants and improved notifications to tenant admins when new domains are created within their tenant."  helpnetsecurity.com


'Double-Whammy' Ransomware Attack
When LockBit Ransomware Fails, Attackers Deploy Brand-New '3AM'

Nothing good happens after 2 a.m., they say, especially when hackers have two kinds of ransomware at their disposal.

In a recent attack against a construction company, hackers who failed to execute LockBit in a target network were observed deploying a second, never-before-seen ransomware, which managed to break through.

The new tool is rather standard fare, blocking various cybersecurity and backup-related software before locking up files on its host computer. But it distinguishes itself with an adorable little theme: 3 a.m., a time when perhaps only insomniacs, hardcore night owls, and black hat hackers are still up and working away.

In a report this week, researchers from Symantec described the first observed use of 3AM - a double-whammy attack in which the LockBit ransomware was blocked but then 3AM squeaked through in one compromised machine.

"This is not the first time we've seen attackers use more than one ransomware family," warns Dick O'Brien, principal intelligence analyst for the Symantec threat hunter team. "Organizations should expect this to happen." darkreading.com


More Federal Cybersecurity Enforcement Coming?
White House mulls rating system to boost cybersecurity for critical infrastructure
The White House is looking to add oversight capabilities to strengthen cybersecurity for critical infrastructure. The administration has been working with various cabinet agencies to bolster cybersecurity in water, rail, aviation, energy and other sectors.

However, Anne Neuberger, deputy national security advisor for cyber and emerging technology, speaking during the Billington Cybersecurity Summit in Washington D.C., raised the possibility of a letter grade rating that would hold key providers accountable for maintaining a certain level of cyber resilience.

As good as public-private partnerships are, the administration sees that additional enforcement ability as a necessary step. A rating type system could hold a provider - such as rail, water or aviation - to a letter grade ranging from A through D, based on their level of cybersecurity fitness.

The administration is also working with the private sector to ensure they have more secure technology products through the Cyber Trust Mark program originally unveiled in July. cybersecuritydive.com


The rise and evolution of supply chain attacks

Microsoft Patches a Pair of Actively Exploited Zero-Days

Montgomery County, TX: Teen among suspects arrested for alleged theft of $18K worth of jewelry from Zales
A 15-year-old was among the suspects arrested for allegedly stealing $18,000 worth of jewelry from a Zales in Montgomery County. On Sept. 10, at about 2:25 a.m., officers with the Shenandoah Police Department were wrapping up a DWI investigation when a sergeant noticed a white Toyota SUV headed northbound on the North Freeway service road. Police said the passing vehicle was driving at a high speed and did not have its lights on. Officers said that it was around that time that they received a call of a burglary at the Zales in the Portofino Shopping Center, and several men were seen smashing glasses and taking jewelry items. Police followed the suspects in the white Toyota, who attempted to flee but were eventually stopped near the 400 block of Nursery Road when a Montgomery County Sheriff's Office deputy deployed spikes. The suspects inside the vehicle reportedly fled on foot. Authorities said jewelry and burglary tools were seen in the vehicle, confirming they were the suspects in the Zales incident. Two of the suspects were arrested, and a third suspect managed to escape but was later found by a deputy.  abc13.com


Thieves smash into Northern Tool, steal $3K in merchandise
Thieves smashed their way into a Memphis hardware store and made off with at least $3,000 in merchandise, including a pressure washer, a professional vacuum and batteries, according to the Memphis Police Department (MPD). MPD said the smash-and-grab happened around 5 a.m. on Wednesday, September 13. When FOX13 arrived at the scene, crews saw the front door of Northern Tool on Summer Avenue caved in with crime scene tape blocking the entrance. The owner told police that he heard a loud bang and then saw a Nissan Maxima and a white pickup truck. After the thieves broke into the store, police said the three people stole two pressure washers but abandoned one of them nearby. At least $3,000 worth of hardware tools were stolen, the owner told police.  fox13memphis.com


Oak Brook, IL: Woman, teens charged with stealing thousands in merchandise from Oakbrook Center Macy's
A woman and two teenage girls were charged with stealing thousands in merchandise from the Oakbrook Center Macy's store earlier this week, according to the DuPage County State's Attorney's Office. Florica Nicolae-Dirivan, 46, appeared in bond court on Tuesday where her bond was set at $10,000 with 10% to apply. She was charged with one count of contributing to the delinquency of a minor, one count of burglary, and one count of retail theft. The girls, 14 and 15, appeared at a detention hearing where they were released to the custody of their father. Both were charged with one count of burglary and one count of retail theft. The office said around 6:15 p.m. on Monday, officers with the Oak Brook Police Department responded to a call of a retail theft at the Macy's department store, located at 1 Oakbrook Center. Nicolae-Dirivan and the girls entered the store together and, while walking through the store. Nicolae-Dirivan would indicate to the girls which items she was interested in by either pointing or picking up an item and then putting it back down. The girls would then pick up the item, take it to another location in the store, and hide the item in a bag underneath one of the girl's dresses. The three then left the store without paying for the items, at which time they were arrested by officers who were already waiting for them outside the store. "The allegations that Ms. Nicolae-Dirivan enlisted two young girls to help her steal more than $3,000 worth of merchandise are extremely disturbing," said State's Attorney Robert Berlin said.  cbsnews.com


Olympia, WA: Man is accused of stealing not one but hundreds of cigarette packs
A 40-year-old man was arrested on suspicion of two counts of second-degree burglary earlier this month after Olympia police say he stole 321 packs of cigarettes. The same store was burglarized twice to accumulate that total, according to police. About 3 a.m. Aug. 31, police were dispatched to a Walgreens at Cooper Point Road and Black Lake Boulevard after a burglary alarm was triggered. Police found a broken window and a trail of cigarette packs from the window to an interior part of the store, Lt. Paul Lower said. Surveillance video was reviewed and an image of the Olympia man was shared with patrol officers, Lower said. The next night police were again dispatched to the same store, but this time they spotted the suspect with two bags under his arms and a crowbar, he said. The total value of the two thefts was more than $3,300, which works out to about $10 per pack.  news.yahoo.com


Guelph, Ontario, CN: Multiple Suspects use hammer to smash through door of Guelph store, steal $10,000 in electronics

Bethany, OK: Store Owner warns of Refund Scammer targeting small businesses across Oklahoma