Target’s profit slumped 46% in the fourth quarter of 2013 as the company struggled to clean up the mess caused by December’s data breach, which disrupted sales and incurred large costs in the crucial holiday season.
The retailer offered a sobering look at its financial affairs nearly three months after the massive credit card data breach was announced. The credit card hack cost the company $61 million in expenses relating to investigating the data breach, though Target actually only incurred an expense of $17 million thanks to its insurance program.
But the company’s overall sales dropped 3.8% to $21.52 billion in the fourth quarter of 2013 compared with a year earlier, while profits dropped 46% to $520 million. Even while average transaction amounts grew 3.2%, the number of transactions dropped 5.5% as some customers avoided the retailer after the breach.
“Results softened meaningfully following our December announcement of a data breach,” said CEO Gregg Steinhafel. As we plan for the new fiscal year, we will continue to work tirelessly to win back the confidence of our guests and deliver irresistible merchandise and offers, and we are encouraged that sales trends have improved in recent weeks.”
The breach exposed 40 million credit and debit card accounts, and personal information like email addresses for up to 70 million people.