Feb. 26 - A massive data breach during the holiday shopping season hurt Target's fourth-quarter profit and the retailer warns future earnings will be negatively impacted as well. Fred Katayama reports.
The massive data breach that struck Target just before Christmas helped chop quarterly profit nearly in half. The intrusion cost the discount retailer $17 million after accounting for insurance payments that will partially offset expenses. Target said it can't put a tab on possible costs related to the intrusion and warned that could hurt future profits. The fallout will deliver a body blow to the current quarter as well. Target now sees its adjusted earnings dropping by roughly half from the previous quarter. Goldman Sachs analyst Matthew Fassler said, "Two key incremental takeaways are negative to our expectations - lower first quarter guidance and the absence of quantification of the breach." In its statement, the retailer didn't blame the weather unlike other retailers. Also hurting earnings: its expansion into Canada. But it was the theft of 40 million credit and debit card records that drew headlines. Others have been hit as well, including Neiman Marcus, prompting retailers to scramble to upgrade their security systems. Target's stock, which has fallen 11 percent this year, rose at the start of trading.