Target faces bigger challenges than TJX after huge data breach

Associated Press

NEW YORK

History doesn’t always repeat itself.

The hit to TJX Cos. was minimal after it disclosed in 2007 a massive data breach of customer information at its T.J. Maxx, Marshalls and HomeGoods stores.

But Target Corp. isn’t faring as well: More than two months after it revealed that hackers stole credit- card numbers and personal data of millions of its customers, Target’s sales, profit and stock prices have dropped.

What’s worse, the nation’s second-largest discounter faces the prospect that some shaken shoppers may not return to its stores for a long time. In fact, Target on Wednesday said it expects business to be muted for some time, though it said sales are recovering since the breach was disclosed in mid-December.

TJX declined to comment for this story, but John Mulligan, Target’s chief financial officer, told The Associated Press on Wednesday that the most-loyal customers have stuck with Target, but wooing back others will take time.

“We need to remind people why they fell in love with Target,” he said.

TJX found itself in the same situation years ago when it announced what was the largest security breach by a retailer at the time. Still, the fortunes of TJX Cos. and Target may wind up being quite different.

Although the data breaches at the two retailers each affected millions of shoppers, analysts say a combination of factors makes Target’s challenge bigger. Those include the timing of each company’s disclosure and Americans’ heightened sensitivity toward privacy concerns now versus before the TJX breach.

The retailers’ fates are playing out differently so far. TJX’s stock slid 12 percent in the weeks after the breach disclosure to as low as $13. But by the end of 2007, the shares rebounded and today, they’re trading at about $58.

Sales also weren’t derailed in the breach’s aftermath: Revenue at stores opened at least a year, an important retail measurement, were up a better-than-expected 4 percent for the year after the breach.