Thursday, August 21st16.8°C
22938
21705

Target's 4Q profit drops on costs related to data breach, Canadian stores

NEW YORK, N.Y. - Target Corp.'s massive data breach over the holidays and the cost of its first expansion outside the United States helped push its fourth-quarter profit down 46 per cent.

The Minneapolis-based company, which operates the second-largest chain of discount department stores after Walmart, said Wednesday that sales fell 5.3 per cent as the breach scared off customers.

Target 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.

It's also bearing the costs of its move into Canada, which reduced the quarter's net income by 40 cents per share and full-year net income by $1.13 per share.

Target 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 per cent.

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 per cent 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 started opening Canadian stores last March in waves that added up to about 124 stores, at locations once owned by Canadian retailer Zellers, by the end of last year.

In the fourth quarter, the Canadian segment contributed $623 million of sales, for a total of $1.3 billion for the full financial year. It had a loss of $329 million in the quarter, before interest and tax items, and a loss of $941 million for the full 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.

The Canadian Press


Read more Business News

17772


Recent Trending




Today's Market
S&P TSX15540.84-21.11
S&P CDNX995.18-1.52
DJIA17045.8566.72
Nasdaq4523.401-3.081
S&P 5001990.54+4.03
CDN Dollar0.9116+0.0001
Gold1278.00-15.40
Oil96.30+1.82
Lumber354.00-1.00
Natural Gas3.809-0.014

 
Okanagan Companies
Pacific Safety0.18-0.005
Knighthawk0.01-0.005
QHR Technologies Inc1.210.00
Cantex0.065-0.005
Anavex Life Sciences0.260.00
Metalex Ventures0.0850.00
Russel Metals37.35-0.10
Copper Mountain Mining2.89-0.03
Colorado Resources0.185+0.015
ReliaBrand Inc0.085+0.008
Sunrise Resources Ltd0.025-0.005
Mission Ready Services0.225-0.005

 



21623

FEATURED Property
18914094129 Gellatly Road, Westbank, BC
3 bedrooms 2 baths
$1,795,000
more details
image2image2image2
Click here to feature your property
Please wait... loading


Joint accounts: what you need to know!

Establishing a joint account may seem like a great strategy at first glance. However, there are many factors that must be considered before taking this action. This article will explore the use of &ls...


Cost of an Injury Lawyer

Let’s face it; nobody wants to pay for legal services if they do not have to, but if you have been injured in an accident you may have thought about hiring a lawyer to help you navigate your cla...


Going home to a bully!

Finally, after three months in New Brunswick, I am back home in the sunny Okanagan. It is a delight to be home and the lake, vistas, people and climate never disappoint. Like many people however, I...

_








Member of BC Press Council


22771