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Target: Data breach caught up to 70M customers

Published: Friday, Jan. 10, 2014 8:57 a.m.CDT • Updated: Friday, Jan. 10, 2014 12:09 p.m.CDT
Caption
(Steven Senne)
FILE - In this Dec. 19, 2013, file photo, a passer-by walks near an entrance to a Target retail store in Watertown, Mass. Target says that personal information including phone numbers and email and mailing addresses was stolen from as many as 70 million customers in its pre-Christmas data breach. That was substantially more customers than Target had previously said were affected. (AP Photo/Steven Senne, File)

NEW YORK – Target's December security breach was significantly more extensive and affected millions more shoppers than the company reported last month.

The nation's second largest discounter said Friday that hackers stole personal information — including names, phone numbers as well as email and mailing addresses — from as many as 70 million customers as part of a pre-Christmas data breach.

Target Corp. announced in December that about 40 million credit and debit cards may have been affected by a data breach that happened between Nov. 27 and Dec. 15 — just as the holiday shopping season was getting into gear.

According to the company's investigation, criminals also took non-credit card related data for some 70 million shoppers who could have made purchases at Target stores outside the late Nov. to mid-Dec. timeframe. Some overlap exists between the two data sets, the company said Friday.

"I know that it is frustrating for our guests to learn that this information was taken and we are truly sorry they are having to endure this," said Gregg Steinhafel, Target chairman, president and CEO, in a statement.

While Target investors have been largely unmoved, the incident has shaken shoppers.

The company's stock has traded at about $63 since news of the breach leaked on Dec. 18. It slipped just 67 cents, or 1 percent, to $62.67 in morning trading Friday.

Target revealed on Friday, however, that the breach diminished holiday sales. The company cut its forecast for fourth-quarter earnings, a key sales barometer.

The theft from Target's databases is still the second largest data breach on record, rivalling an incident uncovered in 2007 that saw more than 90 million credit card accounts pilfered from TJX Cos. Inc.

Target said in December that customers' names, credit and debit card numbers, card expiration dates, debit-card PINs and the embedded code on the magnetic strip on the back of cards had been stolen.

The company has been working with the Secret Service and the Department of Justice on the investigation.

The company said customers won't be liable for the cost of any fraudulent charges that stemmed from the breach.

Target said it will try to contact customers it has email addresses for to provide tips on how to safeguard against consumer scams. The company won't ask customers for any personal information during its email communications.

It's also offering a year of free credit monitoring and identity theft protection to customers that shopped at its stores. Individuals will have three months to enroll in the program. Target said it will provide more details on the program next week.

To woo scared shoppers back to stores on the last weekend before Christmas, Target offered a 10 percent discount on nearly everything. But Customer Growth Partners LLC, a retail consultancy, estimated that the number of transactions at Target fell 3 percent to 4 percent on the Saturday before Christmas, compared with a year ago.

"You have violated that person's trust. And it's going to take time to regain that trust," said Brian Sozzi, CEO & Chief Equities Strategist of Belus Capital Advisors.

Target lowered its fourth-quarter adjusted earnings guidance to a range of $1.20 to $1.30 per share, down from $1.50 to $1.60 per share.

Analysts surveyed by FactSet expect earnings of $1.24 per share.

The Minneapolis company also said that it now foresees fourth-quarter sales at stores open at least a year will be down about 2.5 percent. It previously predicted those sales would be about flat.

This figure is a closely-watched indicator of a retailer's health.

Target cautioned that its fourth-quarter financials may include charges related to the data breach. The chain said the costs tied to the breach may have a material adverse effect on its quarterly results as well as future periods.

The company has 1,921 stores, with 1,797 locations in the U.S. and 124 in Canada.

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