Target Corporation (NYSE:TGT) will exclude the impact of the payment data security breach in its upcoming fourth quarter and annual financial results as reported by Bloomberg based on the confirmation of Eric Hausman, spokesperson for the retailer.
Spokesman said data breach non-recurring event
When asked about the reason of Target Corporation (NYSE:TGT) in excluding the costs related with the payment data breach, Hausman explained, “It is a unique, non-recurring event. This has never happened before. So it is not considered a part of our recurring operations.”
Last week, the second largest retailer in the United States revealed that the hackers stoles the information of 70 million customers including their e-mail addresses, mailing addresses, phone numbers based on its ongoing forensic investigation. That is separate from the 40 million compromised debit and credit card accounts reported by the retailer last month.
Target Corporation (NYSE:TGT) is working with the Department of Justice (DOJ) and Secret Service in the ongoing investigation related to the payment data breach.
Target unable to estimate costs related to data breach
In its recent statement, Target Corporation (NYSE:TGT) said it might include charges related to the payment data breach including “liabilities to payment card networks for reimbursements of credit card fraud and card reissuance costs, liabilities related to REDcard fraud and card re-issuance, liabilities from civil litigation, governmental investigations and enforcement proceedings, expenses for legal, investigative and consulting fees, and incremental expenses and capital investments for remediation activities.”
The company also indicated that it is “not able to estimate the costs or range of costs related to the data breach,” and expected that it would have material adverse effect on the results of its operation in the fourth quarter of 2013 and future period.
Impact of data breach ‘really bad’
Jonathan Weil of Bloomberg opined that the impact of the data breach to Target Corporation (NYSE:TGT) is really bad. He wrote,” It’s not as if Target hasn’t had stuff stolen from it before, or that it doesn’t get sued on a regular basis. The difference is that the latest data heists were really, really bad. The upshot: Small losses count (think shoplifters). But losses stemming from the theft of personal data for tens of millions of customers don’t count, because those would be much bigger.”
He added that the retailer decided to exclude the impact of the data breach in its financial report because of the obvious reason that “it wants to make its preferred numbers look better.” Furthermore, he said that “Pretending they (referring to data breach) didn’t happen — for any reason — is an exceptionally dumb idea.”
Target Corporation (NYSE:TGT) recently stated that since the announcement of the data breach last December 19, its sales became “meaningfully weaker-than-expected,” and projected a 2.5% decline in comparable sales in the fourth quarter.