News Byte: Data Breach Socks Target Earnings by 46%
Target's Q4 results are riddled by data breach.
During the first half of its fourth quarter, said Target CEO Gregg Steinhafel in an earnings statement released today, the chain's holiday-focused marketing plan “drove better-than-expected sales.” Then the unexpected happened. Anywhere from 70 to 130 million Target customers, by various accounts, had their personal files breached by hackers and Target ended up with worse-than-could-be-imagined results.
Sales for the quarter ending February 1 dropped 6.6% and same store sales dipped 2.5%, but costs of dealing with the massive data breach socked Target net earnings to the tune of 46%—plummeting from $961 million in the 2012 quarter to $520 million.
“Results softened meaningfully following our December announcement of a data breach,” Steinhafel said. “As we plan for the new fiscal year, we will continue to work tirelessly to win back the confidence of our guests and deliver irresistible merchandise and offers, and we are encouraged that sales trends have improved in recent weeks.”
The company said it was not currently able to estimate future expenses of the data breach, though it stated it expected it to adversely affect full-year results for 2014. Among costs it anticipates to bear due to the breach are payments associated with potential claims by the card networks for fraud losses and incremental costs associated with civil litigation, government investigations, consulting fees, and investments for remediation activities.