A half dozen financial analysts barely asked Target Corp.’s interim CEO about its massive late-2013 data breach during a recent first-quarter earnings conference call.
Each were understandably more focused on former CEO Gregg Steinhafel’s departure and the search for his replacement, as well as Target’s expansion into Canada.
Is the worst retail data breach in history already a distant consideration to financial analysts?
“When we survey consumers, we increasingly hear that they have put the breach behind them and they’re resuming their Target shopping habits,” said interim CEO John Mulligan before analysts got a crack at company leadership.
He said Target’s US segment sales decline of 0.3 percent was “near the upper end of our guidance and reflects meaningful improvement from trends we were experiencing shortly after the breach.” (First-quarter net profit was $418 million, down 16 percent).
Is this a data-breach success story already, at least in the eyes of investors and consumers? Whatever the reasons for Steinhafel’s departure, did it successfully redirect analysts’ attention?
The word “breach” shows up 21 times in Target’s first-quarter conference call transcript. The word was most said by Kathryn Tesija, chief merchandising and supply chain officer. Tesija explained how the retailer “decided to ramp up” promotions to get shoppers back in the stores after the breach.
“For example, in late February, we offered five 12-packs of Coke products for $10, our lowest price in more than a decade,” Tesija.
If the data breach got Steinhafel called into the board room, he surely made an error if he didn’t mention this. “Whoa whoa whoa. Have you seen what we’re selling Coke for? They’re going to come back. They are all coming back.”
More seriously, Target said it incurred $18 million of data breach-related expenses during the first quarter. Total expenses from the breach are $26 million, offset by $8 received from insurance.
Target said expenses do not include losses for potential claims by payment-card networks for fraud losses related to the breach. Mulligan said future losses for these types of claims cannot be estimated.
Chad Hemenway is Managing Editor of Advisen News. He has more than 15 years of journalist experience at a variety of online, daily, and weekly publications. He has covered P&C insurance news since 2007, and he has experience writing about all P&C lines as well as regulation and litigation. Chad won a Jesse H. Neal Award for Best Single Article in 2014 for his coverage of the insurance implications of traumatic brain injuries and Best News Coverage in 2013 for coverage of Superstorm Sandy. Contact Chad at 212.897.4824 or [email protected].
