Target Offers Update on Data Breach, Earnings Expectations
Target (NYSE:TGT) on Friday issued an update on its data breach investigation nearly one month after alerting customers of possible security theft affecting more than 40 million debit and credit cards.
The Minneapolis-based retailer has watched sales drop and consumer demand deflate after it announced just a week before Christmas that data from about 40 million credit and debit cards were stolen from shoppers at its stores during the first three weeks of the holiday season. The company has stuck to its word about continuing to release new information, and it did so again on Friday via Seeking Alpha.
Target announced that from its ongoing investigation, it has determined that certain customer information was taken during the data breach that is separate from the payment card data already disclosed. This was discovered as officials launched their comprehensive investigation, and from the information they found, they determined that a separate theft had occurred — not considered a new breach — that compromised names, mailing addresses, phone numbers, or email addresses for up to 70 million people.
Target is now planning on contacting affected customers and providing them with information to help guard them against scams. The company also reiterated separately that customers will have zero liability for the cost of any fraudulent charges resulting from the breach. Target will offer one year of free credit monitoring and identify theft protection to all guests who shopped in its U.S. stores.
Gregg Steinhafel, president and CEO of Target, said on Friday via a statement: “I know that it is frustrating for our guests to learn that this information was taken and we are truly sorry they are having to endure this. I also want our guests to know that understanding and sharing the facts related to this incident is important to me and the entire Target team.”
Target on Friday also released an update for its expected fourth-quarter 2013 financial results, providing much-needed details about its profit predictions following the large-scale security breach. According to Business Wire via Seeking Alpha, the big box retailer said it now expects fourth-quarter 2013 adjusted earnings per share to rise from $1.20 to $1.30 compared to prior guidance of $1.50 to $1.60. Those figures translate to a fourth-quarter comparable sales decline of approximately 2.5 percent compared with guidance that was offered prior to the breach, which forecast flat comparable sales.
In a retail industry that is as tight as ever thanks to Wal-Mart (NYSE:WMT) and Amazon.com (NASDAQ:AMZN), the theft was especially damaging to Target, as it cut the company’s holiday shopping season short, but the retailer has had no choice but to forge ahead and continue offering updates from its investigation.
Though Target was not able to provide an update to its expected fourth-quarter 2013 GAAP EPS, it announced it expects its GAAP results to include 5 to 10 cents of dilution due to store closing, real estate impairments, and other similar events. It expects 45 cents of dilution related to the company’s Canadian segment, and it anticipates a net dilution of 1 cent due to the expected reduction in the beneficial interest asset related to the sale of its credit card portfolio. Charges related to the data breach are also likely.
In addition, Target announced Friday that it plans to close eight U.S. stores on May 3. The company, via Seeking Alpha, reports that the stores affected by the announcement are located in West Dundee, Illinois; Las Vegas; North Las Vegas; Duluth, Georgia.; Memphis, Tennessee; Orange Park, Florida; Middletown, Ohio; and Trotwood, Ohio.