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Data-breach costs take toll on Target profit

KDWN

NEW YORK (AP) — Looks like Target Corp. will be feeling the financial pain for a while from the theft of credit card numbers and other information from millions of its customers.

The nation’s second largest discounter said Wednesday that its profit in the fourth quarter fell 46 percent on a revenue decline of 5.3 percent as the breach scared off customers worried about the security of their private data.

While Target said sales have been recovering since the breach was disclosed in mid-December, the company expects business to be muted for some time: It issued a profit outlook for the current quarter and full year that was below Wall Street estimates.

The results come more than two months after Target disclosed that personal credit card data from millions of Target customers was stolen by hackers who targeted credit card terminals in its stores.

During a conference call with investors on Wednesday, Target CEO Gregg Steinhafel said the retailer has been updating shoppers early and often on the facts of its ongoing investigation, offering free credit card monitoring to any customer shopping at a Target store and working on equipping its locations with more secure technology.

“We are committed to making things right,” he said.

Target’s business has been affected by the breach in a number of ways. During the quarter, the number of transactions fell 5.5 percent, in part because of shoppers leery of buying at Target following the breach.

The company also has faced costs related to the breach. Target said it can’t yet estimate how much the data breach will cost it in total.

But in the fourth quarter, it said the breach resulted in $17 million of net expenses, with $61 million of total expenses partially offset by the recognition of a $44 million insurance receivable.

Target said expenses may include payments to card networks to cover losses and expenses for reissuing cards, lawsuits, government investigations and enforcement proceedings. The costs could hurt the company’s first-quarter and full-year earnings, it said.

Target, which based in Minneapolis, earned $520 million, or 81 cents per share, for the three months that ended on Feb. 1. That compares with a profit of $961 million, or $1.47 per share, a year earlier.

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 $4.14 to $60.65 in trading 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.

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.

Data-breach costs take toll on Target profit

KDWN

NEW YORK (AP) — Looks like Target Corp. will be feeling the financial pain for a while from the theft of credit card numbers and other information from millions of its customers.

The nation’s second largest discounter said Wednesday that its profit in the fourth quarter fell 46 percent on a revenue decline of 5.3 percent as the breach scared off customers worried about the security of their private data.

While Target said sales have been recovering since the breach was disclosed in mid-December, the company expects business to be muted for some time: It issued a profit outlook for the current quarter and full year that was below Wall Street estimates.

The results come more than two months after Target disclosed that personal credit card data from millions of Target customers was stolen by hackers who targeted credit card terminals in its stores.

During a conference call with investors on Wednesday, Target CEO Gregg Steinhafel said the retailer has been updating shoppers early and often on the facts of its ongoing investigation, offering free credit card monitoring to any customer shopping at a Target store and working on equipping its locations with more secure technology.

“We are committed to making things right,” he said.

Target’s business has been affected by the breach in a number of ways. During the quarter, the number of transactions fell 5.5 percent, in part because of shoppers leery of buying at Target following the breach.

The company also has faced costs related to the breach. Target said it can’t yet estimate how much the data breach will cost it in total.

But in the fourth quarter, it said the breach resulted in $17 million of net expenses, with $61 million of total expenses partially offset by the recognition of a $44 million insurance receivable.

Target said expenses may include payments to card networks to cover losses and expenses for reissuing cards, lawsuits, government investigations and enforcement proceedings. The costs could hurt the company’s first-quarter and full-year earnings, it said.

Target, which based in Minneapolis, earned $520 million, or 81 cents per share, for the three months that ended on Feb. 1. That compares with a profit of $961 million, or $1.47 per share, a year earlier.

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 $4.14 to $60.65 in trading 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.

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.

Data-breach costs take toll on Target profit

KDWN

NEW YORK (AP) — Target Corp. will be feeling the financial pain for a while from the theft of credit card numbers and other information from millions of its customers.

The retailer said Wednesday that its fourth-quarter profit slumped 46 percent. It also reported that revenue slipped 5.3 percent as the breach scared off customers.

During the holiday shopping season, personal data from millions of Target customers was stolen by hackers who targeted credit card terminals in its stores. The incident has scared shoppers away, and the company says its profits will be affected well into 2014.

“As we plan for the new fiscal year, we will continue to work tirelessly to win back the confidence of our guests. … We are encouraged that sales trends have improved in recent weeks,” said Gregg Steinhafel, chairman, president and CEO of Target.

The data breach comes on top of other woes, including sluggish sales in the U.S. and a disappointing foray into Canada.

The retailer, based in Minneapolis, said it earned $520 million, or 81 cents per share, for the three months that ended Feb. 1. That compares with a profit of $961 million, or $1.47 per share, a year earlier.

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.

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

The breach resulted in $17 million of net expenses in the fourth quarter, Target said, with $61 million of total expenses partially offset by the recognition of a $44 million insurance receivable. The company said it can’t yet estimate how much more the data breach will cost.

Target said expenses may include payments to card networks to cover losses and expenses for reissuing cards, lawsuits, government investigations and enforcement proceedings.

The costs could hurt the company’s first-quarter and full-year earnings, it said.

But investors sent shares of Target up nearly 4 percent, or $2.19 to $58.70 in premarket trading Wednesday as the earnings beat Wall Street estimates by a penny. Investors also seemed soothed that sales were recovering. The stock has fallen about 10 percent since the company disclosed the breach in mid-December.

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

The massive data breach compromised 40 million credit and debit card accounts between Nov. 27 and Dec. 15.

Target disclosed the breach Dec. 19 and then on Jan. 10 it said that 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 TJMaxx that affected 90 million records.

Target is offering free credit monitoring services for a year to those who had their data compromised.

John Mulligan, Target’s chief financial officer, told The Associated Press Wednesday that the most loyal customers have stuck with Target, but wooing back others will take time.

“We need to remind people why they fell in love with Target,” he said.

Target is now accelerating its $100 million plan to implement the use of chip-enabled technology by early 2015 in all 1,800 stores to protect itself against cyber thieves.

It isn’t clear when Target will fully recover from the breach, but Avivah Litan, a security analyst at Gartner Inc., puts the costs of the breach at between $400 million and $450 million.

Target’s results are also being weighed down by stumbles in its expansion into Canada, its first foray outside the U.S.

Target is trying to fix problems with shortages and Canadians’ perception that prices are too high. The company had opened about 124 stores, at locations once owned by Canadian retailer Zellers, by the end of last year.

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.

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

Data-breach costs take toll on Target profit

KDWN

NEW YORK (AP) — Target Corp. will be feeling the financial pain for a while from the theft of credit card numbers and other information from millions of its customers.

The retailer said Wednesday that its fourth-quarter profit slumped 46 percent. It also reported that revenue slipped 5.3 percent as the breach scared off customers.

During the holiday shopping season, personal data from millions of Target customers was stolen by hackers who targeted credit card terminals in its stores. The incident has scared shoppers away, and the company says its profits will be affected well into 2014.

“As we plan for the new fiscal year, we will continue to work tirelessly to win back the confidence of our guests. … We are encouraged that sales trends have improved in recent weeks,” Gregg Steinhafel, chairman, president and CEO of Target, said in a statement.

The data breach comes on top of other woes, including sluggish sales in the U.S. and a disappointing foray into Canada.

The retailer, based in Minneapolis, said it earned $520 million, or 81 cents per share, for the three months that ended Feb. 1. That compares with a profit of $961 million, or $1.47 per share, a year earlier.

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.

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

The breach resulted in $17 million of net expenses in the fourth quarter, Target said, with $61 million of total expenses partially offset by the recognition of a $44 million insurance receivable. The company said it can’t yet estimate how much more the data breach will cost.

Target said expenses may include payments to card networks to cover losses and expenses for reissuing cards, lawsuits, government investigations and enforcement proceedings.

The costs could hurt the company’s first-quarter and full-year earnings, it said.

Shares of Target rose 68 cents to $57.19 in premarket trading Wednesday as the earnings results beat Wall Street estimates by a penny. The stock has fallen about 10 percent since the company disclosed the breach in mid-December.

While the company said that sales have been recovering, the big issue is how much work Target will need to do to bring back customers who are still scared to shop there.

The massive data breach compromised 40 million credit and debit card accounts between Nov. 27 and Dec. 15.

Target disclosed the breach Dec. 19 and then on Jan. 10 it said that 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 TJMaxx that affected 90 million records.

Target is offering free credit monitoring services for a year to those who had their data compromised.

It isn’t clear when Target will fully recover from the breach, but Avivah Litan, a security analyst at Gartner Inc., puts the costs of the breach at between $400 million and $450 million. That would include the bills associated with fines from credit card companies and services for customers like free credit card report monitoring.

Target’s results are also being weighed down by stumbles in its expansion into Canada, its first foray outside the U.S.

Target is trying to fix problems with pricing and shortages in various items. The company has been opening stores in waves that added up to about 124 stores, at locations once owned by Canadian retailer Zellers, by the end of last year.

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.

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

Data-breach costs take toll on Target profit

KDWN

NEW YORK (AP) — Target Corp.’s massive data breach over the holidays helped push its fourth-quarter profit down 46 percent.

The discount retailer also said Wednesday that sales fell 5.3 percent as the breach scared off customers.

The nation’s second-largest discounter also offered a profit outlook below Wall Street expectations as the costs of the breach that affected millions of credit and debit card customers linger.

The discounter, based in Minneapolis, said it earned $520 million, or 81 cents per share, for the three months that ended Feb. 1. That compares with a profit of $961 million, or $1.47 per share a year earlier.

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.

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

The breach resulted in $17 million of net expenses in the fourth quarter, Target said, with $61 million of total expenses partially offset by the recognition of a $44 million insurance receivable.

Shares of Target rose 99 cents to $57.50 in premarket trading Wednesday as earnings results beat Wall Street estimates by a penny. The stock has fallen about 10 percent since the company disclosed the breach in mid-December.

“As we plan for the new fiscal year, we will continue to work tirelessly to win back the confidence of our guests. … We are encouraged that sales trends have improved in recent weeks,” Gregg Steinhafel, chairman, president and CEO of Target, said in a statement.

The results underscore the big challenges that Steinhafel faces.

Even before the breach, Target has struggled with uneven sales since the recession as its middle-income shoppers are still not comfortable in spending. And the company has also grappled with the perception that its prices are too high.

Critics also say that the discounter, known for its exclusive limited partnerships with designers, has lost its edge.

But a massive data breach that compromised 40 million credit and debit card accounts between Nov. 27 and Dec. 15 shook confidence among its customers. Target disclosed the breach Dec. 19 and then on Jan. 10 it said that 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 TJMaxx that affected 90 million records.

Last month when Target disclosed the breach was wider than it thought, it forecast that revenue at stores open at least a year would fall. It had originally expected the measure to be flat.

Target is offering free credit monitoring services for a year to those who had their data compromised.

It isn’t clear when Target will fully recover from the breach, but 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’s results are also being weighed down by its stumbles in its expansion into Canada, its first foray outside the U.S.

Target is trying to fix problems with pricing and shortages in various items. The company has been opening stores in waves that added up to about 124 stores, at locations once owned by Canadian retailer Zellers, by the end of last year.

The company said it expects earnings per share for the current quarter range from 60 cents to 75 cents. Analysts had previously expected 88 cents.

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

Data-breach costs take toll on Target profit

KDWN

NEW YORK (AP) — Target Corp says the massive data breach over the holidays helped push its profit down 46 percent.

The discount retailer said Wednesday that sales fell 5.3 percent as the breach scared off customers.

Target says it earned $520 million, or 81 cents per share, for the three months that ended Feb. 1. That compares with a profit of $961 million, or $1.47 per share, a year earlier.

Revenue fell to $21.5 billion from $22.7 billion.

Revenue at stores open at least a year fell 2.5 percent.

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

The company also offered a profit outlook for the current quarter that is below Wall Street estimates.