Target to close 167 stores across Australia
The futures of dozens of Target stores are up in the air after parent company Wesfarmers announced it was shutting up to 167 stores over the next year.
In a shock announcement, the company revealed up to 75 stores would be shut permanently, while 92 will be converted into Kmart outlets.
The closures mean more than half of Target’s network of 284 stores will be impacted.
In a note to investors on Friday, Wesfarmers managing director Rob Scott says the move is aimed at improving Target’s commercial viability in what is a challenging time for retail.
“For some time now, the retail sector has seen significant structural change and disruption, and we expect this trend to continue. With the exception of Target, Wesfarmers’ retail businesses are well-positioned to respond to the changes in consumer behaviour and competition associated with this disruption,” Scott says.
The closures would also allow Wesfarmers to double down on Kmart, which remains a highly profitable part of their business, he says.
“The actions announced reflect our continued focus on investing in Kmart, a business with a compelling customer offer and strong competitive advantages, while also improving the viability of Target by addressing some of its structural challenges by simplifying the business model.”
Wesfarmers says it will also increase its investment in its online shopping network, after acquiring Catch in August last year.
The announcement revealed Target plans to permanently close between 10 and 25 of its large format retail stores, convert suitable Target and Target Country stores to Kmarts, and close the 50 remaining small format Target Country stores that are not considered for conversion.
Between 10 and 40 large format outlets will become larger Kmart stores, while 52 Target Country locations will be transitioned into smaller format ‘Kmart Hubs’.
It is not year clear which stores will be closed or impacted, which Wesfarmers confirming the majority of the changes will occur next year.
Target’s store support office will also be downsized significantly.