NEW YORK – Looks like Target Corp. will be feeling the financial pain for a while from the theft of credit card numbers and other information from millions of its customers.
The nation’s second-largest discounter said Wednesday that its profit in the fourth quarter fell 46 percent on a revenue decline of 5.3 percent as the breach scared off customers worried about the security of their private data.
While Target said sales have been recovering since the breach was disclosed in mid-December, the company expects business to be muted for some time: It issued a profit outlook for the current quarter and full year that was below Wall Street estimates.
The results come more than two months after Target disclosed that personal credit card data from millions of Target customers was stolen by hackers who targeted credit card terminals in its stores.
During a conference call with investors on Wednesday, Target CEO Gregg Steinhafel said the retailer has been updating shoppers early and often on the facts of its ongoing investigation, offering free credit card monitoring to any customer shopping at a Target store and working on equipping its locations with more secure technology.
“We are committed to making things right,” he said.
Target’s business has been affected by the breach in a number of ways. During the quarter, the number of transactions fell 5.5 percent, in part because of shoppers leery of buying at Target following the breach.
The company also has faced costs related to the breach. Target said it can’t yet estimate how much the data breach will cost it in total.
But in the fourth quarter, it said the breach resulted in $17 million of net expenses, with $61 million of total expenses partially offset by the recognition of a $44 million insurance receivable.
Target said expenses may include payments to card networks to cover losses and expenses for reissuing cards, lawsuits, government investigations and enforcement proceedings.
Target, which is based in Minneapolis, earned $520 million, or 81 cents per share, for the three months that ended on Feb. 1. That compares with a profit of $961 million or $1.47 per share a year earlier.
Revenue fell to $21.5 billion from $22.7 billion. Revenue at stores open at least a year, an important retail measurement, fell 2.5 percent.
Target disclosed on Dec. 19 a data breach that compromised 40 million credit and debit card accounts between Nov. 27 and Dec. 15. Then on Jan. 10 it said hackers also stole personal information – including names, phone numbers as well as email and mailing addresses – from as many as 70 million customers.
The company is accelerating its $100 million plan to implement chip-based credit card technology, which experts say is more secure than using traditional magnetic stripe cards, by early 2015 in all 1,800 stores.