The recent massive data breach at Target Corp. so far has saddled the retail giant with a $61 million tab—one that could rise in the future, the company said Wednesday.
An insurance payment left Target with only $17 million of net expenses from legal assistance, identity-theft protection and other services the company procured after the personal information of as many as 110 million customers was exposed to hackers during the holiday shopping season last year. But in its fourth-quarter earnings report, the Minneapolis-based retailer braced investors for the potential of more costs to come from the cyberattack.
Target didn't estimate future breach expenses. The company, however, said the breach could have a "material adverse effect" on its results of operations in the following months and years. Its future costs could include expenses from litigation, government investigations and card reissuance, the retailer said.
Target's Q4 report, which was the first such report since the retailer acknowledged the breach on Dec. 19, showed that the company posted a net profit of $520 million, a 46 percent drop from 2012.
Gregg Steinhafel, Target's chairman, president and chief executive officer, said in a written statement that "results softened meaningfully" after the digital attack became public.
"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," he said.
Target's earnings report came a week after the Credit Union National Association and Consumer Bankers Association reported that its members racked up more than $200 million on replacing payment cards after the data breach. The trade groups didn't estimate money spent on addressing fraudulent activity, but adding in those expenses would make the total cost of the cyberattack "much higher," according to the associations.
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