Target is struggling to financially recover from the much-publicized data breach announced last year.
The December 2013 breach cost Target $148 million in gross expenses — including a $38 million insurance receivable — throwing off the retailers’ earnings results significantly, Target reported in a press announcement. Breach-related expenses include an increase in estimated probable losses, most of which Target expects to be actual and potential breach-related claims from customers and payment card networks.
“Since the data breach last December, we have been focused on providing clarity on the company’s estimated financial exposure to breach-related claims,” said John Mulligan, Interim President and CEO, CFO of Target Corporation.
Target is now estimating Q2 2014 adjusted earnings to be $0.78 per share, a drop from previous predictions of $0.85 to $1.00 per share. This decrease was caused by several factors, including flat comparable sales and increased markdowns in U.S. stores and softer sales in Canadian locations, coupled with ongoing spending to clear excess inventory.
“While the environment in both the U.S. and Canada continues to be challenging and results aren’t yet where they need to be,” Mulligan noted, “we are making progress in our efforts to drive U.S. traffic and sales, improve our Canadian operations and advance Target’s digital transformation.”
Target will unveil additional Q2 2014 earnings results on Aug. 20, 2014.