Due to its massive data security breach and losses tied to its Canadian expansion, Target Corp. said Wednesday that its fiscal fourth-quarter profit fell 46 percent, Star Tribune reports.
Despite the drop, the profit report was slightly better than investors expected, the paper says.
According to Business Wire, the Minneapolis retailer reported fourth quarter net earnings of $520 million, or $0.81 per share, and full-year net earnings of $1,971 million, or $3.07 per share. The company reportedly earned $961 million in profits, or $1.47 a share, in Q4 2013.
Target said overall sales were $21.5 billion in 2013, down 3.8 percent from the year before, with same store sales down 2.5 percent.
The company told investors that it could not provide a long-term estimate of the security breach, which happened during the crucial holiday shopping season. The cyber attack cost Target about $61 million, but $44 million of the initial expense was covered by insurance, Market Watch reports.
The Star Tribune says the total cost of the breach may not be known for years given potentially lengthy litigation. Last week, five banks in the southern part of the state became the first banks in Minnesota to sue Target to recover costs associated with the data breach. Other banks across the country have also filed suits.
Lower numbers were expected by Target executives Wednesday, given the cyber attack happened near the end of the holiday shopping season.
"During the first half of the fourth quarter, our guest-focused holiday merchandising and marketing plans drove better-than-expected sales. However, results softened meaningfully following our December announcement of a data breach," Target Chairman and CEO Gregg Steinhafel said in a statement. "As we plan for the new fiscal year, we will continue to work tirelessly to win back the confidence of our guests and deliver irresistible merchandise and offers."
Steinhafel added that he's been encouraged over how "sales trends have improved in recent weeks."
The Star Tribune says the announcement will likely weigh on Target shares Wednesday. Shares have already dropped 12 percent since news of the data breach, the paper says.