Target sees decline in Q4 sales

MINNEAPOLIS — Target announced on Wednesday a decline in fourth-quarter sales and earnings; however, executives expressed optimism as they plan for the new fiscal year and work to restore consumer confidence following the data breach.

“For more than 50 years Target has succeeded by focusing on our guests,” stated Greg Steinhafel, chairman, president and CEO of Target. “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. 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.”

During the fourth quarter, total sales dropped 3.8% to $21.5 billion. Net earnings for the quarter totaled $520 million, or 81 cents per share, compared with $961 million, or $1.47 per share, in the year-ago period.

In its U.S. segment, fourth quarter sales decreased 6.6% to $20.9 billion, reflecting the impact of an additional accounting week in 2012 and a 2.5% decrease in same-store sales. Full year 2013 sales in the U.S. segment decreased 0.9% to $71.3 billion, reflecting the impact of an additional accounting week in 2012 and a 0.4% decrease in same-store sales.

For full-year 2013, total sales rose 0.9% to $72.6 billion. Net earnings dropped 34.3% to $1.97 billion.

As previously reported, Target experienced during the fourth quarter a data breach in which an intruder gained unauthorized access to its network and stole certain payment card and other guest information. The company incurred $17 million of net expense in the fourth quarter, reflecting $61 million of total expenses partially offset by the recognition of a $44 million insurance receivable. These expenses include, but aren’t limited to, costs related to investigating the breach, offering credit-monitoring and identity theft protection services to guests and increased staffing in its call centers.

Looking to fiscal 2014, the company noted that it is not able to estimate future expense related to the data breach.

 

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