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Target’s customers haven’t forgiven it for that data breach

Target shopping carts await customers outside a Target department store in Encinitas, California February 21, 2012. Target will report earnings this week. REUTERS/Mike Blake (UNITED STATES - Tags: BUSINESS)
Reuters/Mike Blake
Plenty of carts are available.
By Matt Phillips
Published Last updated This article is more than 2 years old.

The numbers: Not great. Profits tumbled 62% to $234 million, as the big-box retailer spent nearly $150 million trying to straighten out its massive data breach from late last year. Customer transactions continued to decline, falling 1.3% of the same period last year. Sales at stores open at least a year were dead flat. Shares dropped on the news.

The takeaway: Things aren’t going to get better anytime soon. Target axed its full-year profit forecast, citing the ongoing costs of the data breach and soft results from its big push into Canada.

What’s interesting: While Target’s data breach has proved a costly error, there are more fundamental structural issues that are also pressuring the Minneapolis-based chain. Target wrote down the value of its undeveloped land by $16 million during the quarter, as the very notion of suburban big-box retailing has come into question. (Both Wal-Mart (paywall) and Target (paywall) have focused on the growth potential of their smaller-store urban formats.)

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