Target's profit fell nearly 50 percent in its fourth fiscal quarter and declined by more than a third for all of 2013, the retailer reports, damage likely the result of the credit card data breach that compromised information on as many as 110 million customers.
Target posted fourth quarter revenue of $21.5 billion, a 3.8 percent decline over the same time last year. Fourth quarter net income plummeted 46 percent to $520 million, resulting in earnings of 81 cents per share. Targets full-year 2013 revenue increased 0.9 percent to $72.6 billion, while full-year profit declined 34.3 percent to $1.97 billion.
The full-year declines can be attributed not only to the data breach fallout but also a disappointing performance in the company's Canadian segment. Target said that operations in Canada caused a $1.13 per-share drag on its full-year earnings and a 40-cent per-share drag on its fourth quarter profit.
During the first half of the fourth quarter, our guest-focused holiday merchandising and marketing plans drove better-than-expected sales. However, results softened meaningfully following our December announcement of a data breach, Target chairman, president and CEO Gregg Steinhafel said in a statement. 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.
Target said in totaling expenses incurred so far because of the data breach that it saw a $17 million expense in the fourth quarter of 2013, a figure that reflects $61 million in total expenses offset by a $44 million insurance receivable. Among the charges contributing to the total are costs related to investigating the breach, offering credit-monitoring and identity-theft protection services to customers, increased staffing in call centers and legal expenses, the retailer said.
At this time, the company is not able to estimate future expenses related to the data breach, Target added, saying only that future breach-related expenses could include payments associated with potential claims by the payment card networks for alleged counterfeit fraud losses, card reissuance costs and additional legal expenses which could include governmental investigations and enforcement proceedings.
Target cautioned investors that these expenses could have a material adverse effect on its operations for the first fiscal quarter of 2014 and beyond.