Target Profits Tumble After Breach
Even though research shows consumers are rather indifferent to the Target breach, the retail giant did experience a significant profit loss in the fourth quarter of 2013.
Revenue fell 5.3% during that time, but profits were down 46%.
Part of the substantial loss in late 2013 was due to the cost of implementing security measures to avoid similar credit card hacks in the future. Target says the cost of the breach has been $61 million thus far, which has been partially offset by $44 million in insurance payouts.
Currently, the company has a $100 million plan to install chip-enabled credit card readers in all of its stores by early 2015, allowing consumers with chip-and-PIN cards to pay in a more secure way. This is a huge undertaking that no other large-scale retailer is currently planning to implement in such a short frame of time. It could be a game changer for Target.
The company’s stock has fallen about 10% since the breach, but some analysts predict a rebound during the first quarter of this year. Target will be closing eight of its stores in the United States by May, and it may need to make adjustments for the “heavy competition” the company is facing in Canada at this time.