Target's data breach tab: $110 million
Time may heal wounds for some, but for discount retailer Target, the damages from its 2013 data breach just keep coming.
Target announced Tuesday that it is lowering the earnings outlook for its second quarter financial period, citing costs related to the now infamous data breach and the repayment of debt.
The Minneapolis-based retailer saw net expenses of $110 million from the data breach, and said it now expects to earn roughly 78 cents a share for the quarter, down from the 85 cents to $1 per share it had previously anticipated. Target also said it expects sales to be flat at established locations in the U.S.
Costs from the breach include losses for the majority of actual and potential breach-related claims, including those from payment card networks.
According to a report from the analyst firm Stifel, the costs could have been much worse:
"We think this is a "less bad" than feared data breach expense and a reminder of the persistent pressures on Target's business."
John Mulligan, interim president and CEO, and CFO of Target, issued a prepared statement addressing the lowered forecast, albeit a bit devoid of any depth related to the data breach damages:
"Since the data breach last December, we have been focused on providing clarity on the Company's estimated financial exposure to breach-related claims. With the benefit of additional information, we believe that today is an appropriate time to provide greater clarity on this topic.
While the environment in both the U.S. and Canada continues to be challenging, and results aren’t yet where they need to be, we are making progress in our efforts to drive U.S. traffic and sales, improve our Canadian operations and advance Target’s digital transformation."
Just last week Target named former PepsiCo CEO Brian Cornell as its next Chairman and CEO. Cornell is the first outsider to take the helm of the retail chain. His appointment could be seen as a move to boost consumer confidence in the company's ability to rebuild and salvage its brand.
Mulligan said the new CEO will focus on furthering Target's mission to become a "leading omnichannel retailer" – a mission that will likely be buoyed by Target's recent efforts to step up its data and analytics capabilities.
According to a report in the Minneapolis Star Tribune, on Monday Target marked the opening of technology hub in Silicon Valley that will be geared toward data analytics and engineering for its mobile and online teams. The 7,000-square-foot office space will initially house around 15 employees, but could one day have upward of 70, Target spokesperson Eddie Baeb said.
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