One state is battling massive retail threat the right way, while another fails

Dick's Sporting Goods  (DKS) - Get Free Report put a spotlight back on a big issue in retail when it released its earnings this week. 

The company cut its full-year earnings forecast "due in large part to the impact of elevated inventory shrink (retail jargon for theft), an increasingly serious issue impacting many retailers," according to CEO Lauren Hobart. 

DON'T MISS: Dick's stock sheds $3 billion in value as theft surge hammers Q2 profits

Some places are starting to fight back against the scourge of organized retail theft, while other places are making it easier for that theft to occur, according to Matt Shay, CEO of the National Retail Federation. He spoke to CNBC and highlighted one place that is doing it right, and one that isn't.

Shay praised what New York City Mayor Eric Adams is doing with the retail theft task force he put together in May, praising the mayor for partnering with retailers and their CEOs.

Meanwhile, California has become one of the public face of organized retail theft, as viral videos of mobs of people cleaning out retailers in the state -- seemingly without any threat of consequences -- have repeatedly gone viral. 

More Retail:

• ‘Too pretty’ Home Depot worker faces backlash after viral mirror post
• A classic kitchenware brand files for Chapter 11 bankruptcy
• Who’s running The Gap? With no CEO, retailer hurtles towards crisis

Shay pointed to one piece of 2014 legislation that helped get the state into the predicament it is in currently, while advocating for its repeal.

"That was the proposition that passed in 2014 that reclassified many of these property crimes as misdemeanors below a $850 threshold. And that, I think in many ways, set the tone in that state and in many cities in that state for a different approach to policing and criminalizing some of this behavior," Shay told CNBC Wednesday. 

Organized retail theft wouldn't be so popular without resellers, or fencers, who can easily profit from the goods through online marketplaces like Amazon, eBay, Facebook Marketplace and others. 

"Marketplaces should be held accountable. They should be required to validate the source of the goods, the seller, the authenticity, the provenance," Shay said. 

He pointed to progress on passing the Inform Act which gives the Federal Trade Commission the authority to punish online retailers who sell fenced goods with penalties of up to $50,120 per violation. 

Check out Shay's full interview below.

"Police are doing everything they can, but state legislators have said they're going to classify this as a misdemeanor," says Matt Shay on retail theft. "Retailers have people coming in with a shopping list, making sure they don't go over $800, and walking out the door." pic.twitter.com/MqsKGJdLGe— Squawk Box (@SquawkCNBC) August 23, 2023

Get investment guidance from trusted portfolio managers without the management fees. Sign up for Action Alerts PLUS now.