Target's Data Breach Costs the Company $148 Million
Target announced today that its second quarter earnings will include a $148 million charge related to losses stemming from a data breach that occurred during last year's holiday shopping season. It also warned that its profit for that period would be softer than expected.
During the fourth quarter of 2013, Target experienced a data breach in which an intruder gained unauthorized access to its network and stole payment card and other guest information. More than 110 million consumers were affected.
In a statement, the company said the expenses it will record in the second quarter are for the “vast majority of actual and potential breach-related claims, including claims by payment card networks.” Those expenses will be somewhat offset by a $38 million insurance receivable, the company said.
But things aren't all bad for the Minneapolis-based retailer. According to the StarTribune, Target quietly unveiled a new technology hub in Sunnyvale, Calif. this week, its second major outpost in the state. In 2012, Target opened its Technology Innovation Center in downtown San Francisco.
While the San Francisco-based office, which has about 20 employees, is focused on testing and exploring new technologies with startups, the Sunnyvale office will be more geared toward data analytics and engineering for its online and mobile teams, said Eddie Baeb, a Target spokesman.
“This is really about being in a location that's close to and makes it easy for the talent we want to work with to be at Target,” he said.
Target was one of the first retailers to open a tech innovation lab in Silicon Valley. Today, companies such as Nordstrom, Home Depot, Staples, American Eagle, Wal-Mart and Sears have all followed suit and opened up shop there in an effort to find the talent to help develop technology that optimizes the shopping experience.