Share “Data-breach costs take toll on Target profit”

Data-breach costs take toll on Target profit

Published on NewsOK Modified: February 26, 2014 at 3:29 pm •  Published: February 26, 2014
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Revenue fell to $21.5 billion from $22.7 billion. Revenue at stores open at least a year, an important retail measurement, fell 2.5 percent.

In addition to the breach, Target's results were hurt by stumbles in its expansion into Canada, its first foray outside the U.S.

Analysts had expected a profit of 80 cents on revenue of 21.5 billion, according to FactSet estimates.

Investors sent shares of Target up more than 7 percent, or $3.98 to $60.49 on Wednesday as the earnings beat Wall Street estimates by a penny and met analysts' sales estimates. The increase comes as Target's stock had fallen 11 percent since the company disclosed the breach in mid-December. The stock is now down 5 percent since the theft was disclosed.

Still, Target has much work to do to bring back customers who are still scared to shop there.

Target disclosed on Dec. 19 data breach compromised 40 million credit and debit card accounts between Nov. 27 and Dec. 15. Then on Jan. 10 it said hackers also stole personal information — including names, phone numbers as well as email and mailing addresses — from as many as 70 million customers.

When the final tally is in, Target's breach may eclipse the biggest known data breach at a retailer, one disclosed in 2007 at the parent company of TJ Maxx that affected 90 million records.

Target says it's taking steps to sure up its business. Company executives told investors on the call that it wants to make the store "irresistible" to shoppers with trendy merchandise and discounts.

Target also is trying to fix merchandising problems and Canadians' perception that prices are too high.

And the company is accelerating its $100 million plan to implement chip-based credit card technology, which experts say is more secure than using traditional magnetic stripe cards by early 2015 in all 1,800 stores.

The company said it expects earnings per share for the current quarter to range from 60 cents to 75 cents. Analysts had previously expected 88 cents. Target also expects revenue at stores opened at least a year to be flat to down 2 percent.

For the full year, Target expects earnings per share to range between $3.85 and $4.15. Analysts had expected $4.21.