Target Says Up To 70 Mln People Hit In Data Breach; Cuts U.S. Segment Outlook

(RTTNews) - Retail giant Target Corp. (TGT) said Friday that the recent credit-card security breach has affected up to 70 million customers and added that some customer information apart from the payment card data previously disclosed, was stolen during the data breach.

In addition, the company lowered the fourth-quarter earnings outlook for its U.S. Segment, citing a decline in comparable sales, and said it plans to close eight U.S. stores on May 3, 2014. The company also said that its fourth-quarter earnings results may include charges related to the recent massive data breach.

In mid-December, Target confirmed a massive credit card security breach and said that federal authorities were investigating the data breach potentially involving millions of customer credit and debit card records.

Hackers apparently had access to accounts used for in-store purchases from the Black Friday holiday shopping weekend through December 15. Target had previously said that about 40 million customers were affected by the data breach. At that time, Target urged shoppers to scan their credit card account statements and monitor free credit reports for unusual activity.

Providing an update on the data breach, Target said Friday that the theft of customer information was not a new breach, but was discovered as part of the company's ongoing forensic investigation. The company added that its investigation has determined that the stolen information includes names, mailing addresses, phone numbers or email addresses for up to 70 million individuals.

Further, Target said that while much of the data is "partial in nature", it will attempt to contact affected guests in cases where the company has an email address. According to Target, the communication will be informational, including tips to guard against consumer scams. The company will not ask those guests to provide any personal information as part of that communication.

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

Further, Target said that guests will have zero liability for the cost of any fraudulent charges arising from the breach. The company will offer one year of free credit monitoring and identity theft protection to all guests who shopped its U.S. stores. Guests will have three months to enroll in the program.

Target now forecasts fourth-quarter adjusted earnings at its U.S. segment in a range of $1.20 to $1.30 per share, down from the prior range of $1.50 to $1.60 per share. The revised outlook anticipates a comparable sales decline of about 2.5 percent, compared with the prior guidance of about flat comparable sales.

Target said that while it is not able to provide an update to its expected fourth-quarter reported earnings per share, the results are expected to include $0.05 to $0.10 of dilution related to store closings, real estate impairments, and similar discrete events.

In addition, the company now expects its fourth-quarter earnings results to include about $0.45 of dilution related to its Canadian Segment, compared with its prior guidance for dilution of $0.22 to $0.32.

The increase in dilution related to the Canadian segemnt is driven by the gross margin impact of continued efforts to clear excess inventory, and net dilution of $0.01 due to an expected reduction in the beneficial interest asset related to the sale of the company's credit card portfolio, partially offset by the resolution of income tax matters.

In mid-November, Target reported a 46 percent decline in profit for the third quarter, as higher revenues were more than offset by costs related to the company's Canadian expansion and softer-than-expected comparable store sales at its U.S. Segment.

In Friday's regular session, TGT is trading at $63.01, down $0.33 or 0.52 percent on a volume of 1.23 million shares.