Target Makes a Comeback One Year After Security Breach
Almost a year after Target’s massive security breach that exposed the personal information of more than 100 million customers, the Minneapolis-based retail giant is beginning to make a comeback.
Stifel Nicolaus analyst David Schick recently upgraded its rating on the company to “buy” from “hold,” setting a six- to 12- month price target of $76 on the stock. He cited increased store traffic and improved merchandising strategy as key reasons for the upgrade.
In his report, Schick said Target has been playing more “on offense” lately. One example, he explained, was the retailer’s strategy to offer free shipping on all online orders during the holiday shopping season, up until Dec. 20.
Analysts at Jefferies also raised their price target for Target, suggesting $59 for the retailer, up from the previous mark of $55— based on optimism regarding the upcoming holiday season.
Although Target Corp. declined to comment about how the company is doing a year following its security breach, its most recent earnings reports paint a somewhat sunny picture. In its second-quarter 2014 earnings report, Target’s revenues slightly increased by 1.7 percent since the same quarter one year prior. Digital sales increased more than 30 percent.
In its second-quarter 2014 earnings report, Target’s executive Vice President and CFO John Mulligan admitted that the quarterly results “didn’t meet our expectations,” but he added, “we are seeing some early signs of progress.”
To be sure, Target has had some setbacks, such as the closing of 19 stores so far within the past year. These closings included two stores in the Las Vegas area, two in Ohio and three in Michigan.
However, traffic at the retailer has been up and the company has been garnering positive attention compared to some of its competitors.
Competing retailer Wal-Mart, for example, had a few missteps lately, such as listing a Halloween costume category called “Fat Girl Costumes” on its website. Target, on the other hand, has experienced public attention surrounding Internet sensation “Alex from Target,” a teen-aged Target employee from Texas who, while bagging groceries, was photographed by a girl who thought he was cute. He now has more than 664,000 followers on Twitter and quickly rose to fame, being featured on websites such as CNN and the Washington Post.
Despite its recent gaffe, competitor Wal-Mart posted favorable results in its latest earnings report, beating Wall Street expectations for the third quarter. The company reported revenue of $119 billion, better than analyst expectations of $118.35 billion, according to Zacks Investment Research. Wal-Mart shares jumped 4.14 percent to $82.48 in afternoon trading on Thursday following its third quarter report. In comparison, Target's stock, during the same time period, was trading around $67.
As for last year’s security breach, many shoppers — at Target and other retailers — remain undeterred.
According to a study by Deloitte, 42 percent of consumers expressed concern about their personal data when making in-store purchases, but 56 percent of respondents said they still plan to shop this holiday season at retailers that have experienced a data breach.
Another report by CreditCards.com suggests 52 percent of major credit and debit card holders either “probably” or “definitely” would shop at a store where shoppers’ personal data had been exposed.
“Even though I am reminded of Target’s security breach from time to time, I still continue to shop there, especially for baby products and children’s toys,” said Trisha Ricci, of North Haven, Conn. “The store offers some of the best prices around.”
Ricci said she uses her credit card when making these purchases. "It's a safer alternative to my debit card."
“My bank was very proactive following the breach at Home Depot, where we were affected,” Ricci said. “I went to use my card after the breach and it was declined. Bank of America immediately shut off my credit card and mailed me a new one.”
Anne Bergeron, also from North Haven, Conn., is more cautious. “I won’t use a credit card there [Target] because of last year’s breach,” she said. “I almost always use cash, just to be safe.”
Symantec Corporation, the world’s leading cyber security company, allows organizations, governments, and people to secure their most important data wherever it lives. More than 50 million people and families rely on Symantec’s Norton and LifeLock comprehensive digital safety platform to help protect their personal information, devices, home networks, and identities.