By Renee Dudley
Target on Wednesday posted fourth-quarter profit that topped analysts’ estimates, signaling that it’s regaining customer loyalty after a data breach affected tens of millions of shoppers at the peak of the holiday season.
Net income fell 46 percent to $520 million, or 81 cents a share, from $961 million, or $1.47, a year earlier, the Minneapolis-based company said. Analysts had projected 79 cents, the average of 21 estimates compiled by Bloomberg. Sales declined 5.3 percent to $21.5 billion in the period, which ended Feb. 1, matching predictions.
Chief Executive Officer Gregg Steinhafel has been working to keep customers coming into stores after hackers stole card data and personal information from millions of shoppers. The second-largest U.S. discount retailer offered customers a weekend of 10 percent discounts in December and a year of free credit monitoring. Those efforts are beginning to pay off, Steinhafel said Wednesday.
“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,” he said in the statement.
Target shares have declined about 11 percent this year compared with a 6.8 percent drop for Wal-Mart Stores Inc. and a 0.2 percent decrease for the Standard & Poor’s 500 index.
Target’s U.S. comparable-store sales decreased 2.5 percent in the fourth quarter, in line with the company’s forecast. It attributed the decline to the hacker intrusion.
The breach “is a serious situation, but one that we think Target should recover from,” said Jason DeRise, an analyst at UBS, in a note before the results were released. He rates the shares neutral.
Sales at the U.S. unit were “meaningfully weaker” after the data theft was disclosed, the company said in January.
Target spent $61 million responding to the data breach last quarter, including costs to investigate the incident and offer identity-theft services to customers. Insurance covered $44 million of the tab, leaving the company with an expense of $17 million in the period.