News Column

Target Data Breach Much Worse Than Thought

January 10, 2014

Evan Ramstad, Star Tribune

target store
A data breach at Target Corporation has put more than 70 million people at risk (file photo)

Jan. 10--Target Corp. said Friday that the thieves who accessed its data system from late November through mid-December were able to obtain personal details of about 70 million of its customers, far more information than previously thought.

The company said its ongoing investigation of the incident had revealed that hackers were able to steal names, mailing addresses, phone numbers and e-mail addresses, though it said much of the data is partial in nature.

Previously, Target had said the thieves accessed financial information, such as credit card numbers and debit accounts used to make payments during the period.

"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," said Gregg Steinhafel, chairman, president and chief executive officer, Target. "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."

The company said that customers would encounter "zero liability" from any damage they suffer due to the theft of Target's data. It offered to provide free credit monitoring and identity theft protection for customers for a year.

Target also gave the first details of how the theft was affecting it financially, saying that sales fell off sharply after the incident was revealed in mid-December. It lowered its outlook for fourth-quarter comparable sales revenue to a drop of 2 percent to 6 percent. It previously thought such sales would be unchanged from the year-earlier period.

Target also said it expects further charges against earnings for costs related to the breach but it could not now estimate their size.

Target shares were indicated to fall about 2 percent shortly before the stock market opened Friday morning.

The company's statement comes at the end of a week of bad news from U.S. retailers, with many saying that holiday sales fell below expectations. Specialty stores like Bed, Bath & Beyond, American Eagle Outfitters and Pier 1 Imports all told investors to expect lower-than-expected results and Sears Holding Corp. late Thursday said it expected to report a net loss for the latest period.

Target said Friday morning that it now expects its fourth-quarter profit to be in a range of $1.20 to $1.30 a share, down from its previous expectation of $1.50 to $1.60 a share.

Executives said the company's sales were doing better than they expected before the data breach was revealed on Dec. 19. Sales since then have been "meaningfully weaker," though they "have shown improvement in the last several days."

In addition to the potential costs of the data breach, Target said its fourth quarter performance would be weakened by expenses related to closing eight stores, some real estate costs and some costs related to its massive expansion in the Canadian market this year, where it opened more than 100 stores.

"In light of the recent data breach, our top priority is taking care of our guests and helping them feel confident in shopping at Target," John Mulligan, Target's chief financial officer said in a statement. "At the same time, we remain keenly focused on driving profitable top-line growth and investing our resources to deliver superior financial results over time. While we are disappointed in our 2013 performance, we continue to manage our business with great discipline and leverage our expense optimization efforts to reinvest in multichannel initiatives that generate long-term value for our shareholders."

Evan Ramstad -- 612-673-4241

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(c)2014 the Star Tribune (Minneapolis)

Visit the Star Tribune (Minneapolis) at www.startribune.com

Distributed by MCT Information Services

Original headline: Target says personal data of 70M people at risk, warns of financial hit


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Source: (c)2014 the Star Tribune (Minneapolis)


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