Target Australia could see 167 locations go over the next year.
Parent company Wesfarmers has confirmed 75 Target stores will be shuttered while 92 will be converted into Kmart outlets.
This will affect around half of Target’s 280 store network.
The announcement comes at a critical time for Wesfarmers department store division.
It also revealed $780 million of writedowns on its Kmart Group and industrial and safety branch today, as well as plans to accelerate the growth of its hero brand Kmart.
Wesfarmers managing director Rob Scott said the changes would “enhance the overall position of the Kmart Group, while also improving the commercial viability of Target”.
In February, Kmart clocked a 5.5 per cent first-half comparable sales growth from a 0.6 per cent decline a year ago.
Revenue at the discount department store was up $241 million or 7.6 per cent to $4.99 billion.
Meanwhile, Target continued to sustain consecutive losses.
Target's comparable sales fell 2.3 per cent compared with 0.5 per cent growth a year ago as it recorded $67 million sales dive.
Kmart Group managing director Ian Bailey said the company had made a significant effort to avoid store closures, retain staff and support suppliers.
“Unfortunately, the disruptive and competitive nature of the retail sector requires us to make some difficult decisions to ensure we have a viable Target business into the future.”