Error message

  • Warning: preg_match() [function.preg-match]: Unknown modifier '2' in getOS() (line 1183 of /home/citywire/public_html/sites/all/themes/tcw/template.php).
  • Warning: preg_match() [function.preg-match]: Unknown modifier 'c' in getOS() (line 1183 of /home/citywire/public_html/sites/all/themes/tcw/template.php).

Data breach dings Target finances

The holiday season was brutal for many retailers, but Target also was hit hard from the massive data breach during the height of the holiday shopping season, a situation still unfolding.

Target said losses related to the data breech were $61 million in the fourth quarter, partially offset by $44 million in insurance receivables.These expenses include costs related to investigating the data breach, offering credit-monitoring and identity-theft protection services to our guests, increased staffing in our call centers, procurement of legal and other professional services, REDcard fraud losses and card replacement costs, and an accrual for a probable loss on payment card networks anticipated claims for operating expenses incurred as a result of the data breach.

The costs do not include any amounts for the potential claims by the payment card networks for counterfeit fraud losses. Target said at this time it is unable to reasonably
estimate a range of possible losses on the payment card networks potential claims in excess of the amount accrued.

Target executives said future earnings will likely be impacted from these ongoing costs for some time.

Avivah Litan, a security analyst at Gartner Inc., a technology firm, puts the costs of the breach from the $400 million to $450 million. That would include the bills associated with fines from credit card companies and services for its customers like free credit card report monitoring.

Target reported net income of $520 million or 81 cents per share, falling 46% from the fourth quarter period in 2012, but inline with the lower guidance given following the data breech. Revenues fell 3.8% year-over-year to $21.52 billion, reflecting the impact of an additional accounting week in the prior year and a 2.5% decrease in comparable sales. Like Wal-Mart, Target gave a lower guidance for this year, which was below the consensus estimate.

Advertisement:

So far Wall Street’s action has been favorable to the lackluster report with Target shares rallying nearly 4% in early trading on Wednesday (Feb. 26). Target shares (NYSE: TGT) were trading up more than $2 at $58.59 on heavy volume.

Five Star Votes: 
No votes yet

Like This Article? Share It!