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Security Breach Isn't Target's Only Problem

August 25, 2014 | About:
David Goodloe

David Goodloe

9 followers

There is a Target (TGT) store near where I live, and I shop there because it is convenient and its prices are low – at least on certain items that I tend to buy regularly.

I used to shop there a lot more often than I do now, but my habits changed. I was one of the millions whose personal information was compromised through Target’s system via a cyberattack late last year.

The attack, as you may recall, affected millions of consumers’ credit cards and debit cards. I had a personal policy before the cyberattack – I only used my debit card there.

I only used it for a minor purchase or two during the holiday season when the cyberattack occurred, but I still had to replace my debit card, which was a nuisance; I handle all my transactions there by cash now, and sometimes I buy things I once bought at Target at other stores – not because they are less expensive but because those stores haven’t had data-breach issues.

My Target transactions were fairly modest before the cyberattack, but I have cut back on my purchases at Target since. At the time I made that decision, I didn’t think about what other consumers were doing, only about what was best for me.

But a recent article in the Wall Street Journal about Target’s 62% decline in earnings for the fiscal second quarter mentioned a “shopper malaise” that has influenced consumers in 2014. The data breach must be part of it, to be sure, but there is also a trend toward online sales that has cut deeply into retailer traffic for other stores, not just Target.

In such an environment, though, in which convenience is a big factor in consumer decisions, any negative publicity is bound to be an additional drag

Net income for Target is lower than it has been in nearly 10 years. Then, net income was clearly on an upward trajectory; just as clearly today, net income is on a downward trajectory. Target wisely lowered its earnings expectations for the year.

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The more general nature of Target’s in-store offerings, once one of its great attractions, may be hurting its store traffic. Smaller, more specific stores – for example, home-improvement outlets like Lowe’s (LOW) and Home Depot (HD) – appear to be thriving.

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About the author:

David Goodloe
I'm a journalist by training. I grew up in Arkansas and earned my B.A. at the University of Arkansas. I earned my master's degree at the University of North Texas. My background includes stints at newspapers in Arkansas and Texas and teaching news writing and news editing to students at the University of Oklahoma and Richland College here in Dallas. I'm the editorial manager at GuruFocus.

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Comments

sdmaley
Sdmaley - 3 months ago

"Over 1,000 US businesses hit with the same cyberattack as Target": www.engadget.com/2014/08/22/backoff-cyberattack-target/?ncid=rss_truncated

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