Market Overview

Target Updates Concerned Clients and Investors Over Data Breach

On Friday, Target (NYSE: TGT) issued a press release to update investors and concerned clients over its recent data breach.

The company stressed the fact that affected clients will have zero liability for any fraudulent charges as a result of the data breach. Additionally, the company will offer one year of free credit monitoring and identity theft protection to anyone affected.

“It has been determined that certain guest information – separate from the payment card data previously disclosed – was taken during the data breach,” the company wrote in its press release. “At this time, the investigation has determined that the stolen information includes names, mailing addresses, phone numbers or email addresses for up to 70 million individuals.”

Additional details will be revealed next week and affected customers are urged to stay up to date at target.com/databreach

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Data breach reaction: lowering guidance

In Target's press release, the company updated investors with its expected fourth quarter 2013 results. The company now expects its fourth quarter EPS to come in a $1.20 to $1.30 range, lower than previous guidance of $1.50 to $1.60.

Analysts at ISI Group said that the lowered guidance is a byproduct of the security breach.

“After a stronger start to the holiday season – likely a 2 percent comp through mid-December, Target's comp trends show the impact of the data breach likely down in a high single digit range,” Greg Melich, analyst at ISI Group said in a note to clients. “We estimate that roughly half of the 4Q guidance reduction is related to loss of leverage on $0.5 billion lower top-line, with half due to gross margins likely down 60bps+.”

Melich also noted that Target's “resilience suggests that its cash flow and dividend provide a solid floor of value, even if 2014 Adjusted EPS is lowered by a similar amount to today's miss. We had estimated a $3.7 billion buyback for 2014 versus the $4 billion that some had hoped for, as we struggle to find the free cash flow to fund the full $4 billion buyback.”

Shares remain Buy rated with a $70 target at ISI Group.

Posted-In: Greg Melich Target Guidance ISI Group Target Data Breach Target Fourth QuarterNews Retail Sales Management Press Releases Best of Benzinga

 

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