Massive Target breach could have lasting effects
NEW YORK (AP) - Fallout from Target's pre-Christmas security breach is likely to affect the company's sales and profits well into the new year.
The company disclosed on Friday that the massive data theft was significantly more extensive and affected millions more shoppers than the company reported in December. As a result of the breach, millions of Target customers have become vulnerable to identity theft, experts say.
The nation's second largest discounter said hackers stole personal information - including names, phone numbers as well as email and mailing addresses - from as many as 70 million customers as part of a data breach it discovered last month.
Target announced on Dec. 19 that some 40 million credit and debit card accounts had been affected by a data breach that happened between Nov. 27 and Dec. 15 - just as the holiday shopping season was getting into gear.
As part of that announcement, the company said customers' names, credit and debit card numbers, card expiration dates, debit-card PINs and the embedded code on the magnetic strip on the back of cards had been stolen.
According to new information gleaned from its investigation with the Secret Service and the Department of Justice, Target said Friday that criminals also took non-credit card related data for some 70 million individuals. This is information Target obtained from customers who, among other things, used a call center and offered their phone number or shopped online and provided an email address.
Some overlap exists between the 70 million individuals and the 40 million compromised credit and debit accounts, the company said.
The revelations mean more than 70 million people may have had their data stolen. And when the company releases a final tally, the theft could become the largest data breach on record for a retailer, surpassing an incident uncovered in 2007 that saw more than 90 million records pilfered from TJX Cos. Inc.
The latest developments come as Target said that just this week it was starting to see sales recover from the crisis. The company, however, cut its earnings outlook for the quarter that covers the crucial holiday season and warned that sales would be down for the period.
But with the latest news, some analysts believe the breach could be a financial drag on the company for several more quarters.
"This is going to linger like a black cloud over the company's financials for the first half of the year," said Brian S. Sozzi, CEO & chief equities strategist at Belus Capital Advisors.
Meanwhile, the Attorney General from New York announced that it is participating in an investigation into the security breach. Attorney General Eric T. Schneiderman called the latest news "deeply troubling."
Molly Snyder, a Target spokeswoman, told The Associated Press that the company had no new details to share about how the data breach was executed. The company has only said that the point-of sale system in its U.S. stores was compromised.
"I know that it is frustrating for our guests to learn that this information was taken and we are truly sorry they are having to endure this," said Gregg Steinhafel, Target chairman, president and CEO, in a statement.
Target investors have been largely unmoved by the company's disclosures. Target's stock, while volatile, has traded at about $63 since news of the breach leaked on Dec. 18. It slipped just 72 cents, or more than 1 percent, to $62.62 in trading Friday.