Nine-Month TJX Loss from Data Breach Could Hit $29 Million

 
 
By Evan Schuman  |  Posted 2007-05-16 Email Print this article Print
 
 
 
 
 
 
 

The figure, while not trivial, is dramatically below some industry projections of billion-plus-dollar losses. Customer loyalty—and apathy—is proving to be the key difference.

TJX reported May 15 that, in the three months leading up to April 28, it spent $12 million dealing with the data breach the company announced in January. Thats on top of $5 million the company said it spent in the previous three months to deal with the breach. A TJX statement said the money spent "includes costs incurred to investigate and contain the intrusion, enhance computer security and systems, and communicate with customers, as well as technical, legal, and other fees." The latest quarterly cost comes to 3 cents per share. TJX advised investors that it expects to have to spend even more in the current quarter, perhaps another 2 to 3 cents per share, which would come to about another $8 million to $12 million. If that holds, it would total about $25 million to $29 million for that nine-month period.
Although some in the industry have projected huge—more than $1 billion—costs for TJX in connection with the breach, a large portion of those assumptions are based on guesses that TJX customers would sharply reduce purchases and that huge amounts of money would be spent contacting every potential victim. Thus far, both assumptions are not panning out.
Click here to find out why encryption didnt save TJX. When TJX first disclosed in January the massive data breach—card information of some 46 million consumers fell into unauthorized hands—it was apparently not in compliance with retail industry PCI standards, especially concerning a wireless store network where the intruders reportedly first gained access.
Still, the $16 billion retailer—which owns Marshalls, TJMaxx, Bobs Stores and A.J. Wright—was careful not to predict how much it will eventually have to pay, especially with quite a few class-action lawsuits (from both consumers and banks) pending, as well as state attorney general investigations and other government probes. "Beyond these costs, TJX does not yet have enough information to reasonably estimate the losses it may incur arising from this intrusion, including exposure to payment card companies and banks, exposure in various legal proceedings that are pending or may arise, and related fees and expenses, and other potential liabilities and other costs and expenses," it said in a statement issued May 15. "The company will record known losses when they become both probable and reasonably estimable." Check out eWEEK.coms for the latest news, views and analysis on technologys impact on retail. Retail Center Editor Evan Schuman can be reached at Evan_Schuman@ziffdavis.com. Check out eWEEK.coms for the latest news, views and analysis on technologys impact on retail.
 
 
 
 
Evan Schuman is the editor of CIOInsight.com's Retail industry center. He has covered retail technology issues since 1988 for Ziff-Davis, CMP Media, IDG, Penton, Lebhar-Friedman, VNU, BusinessWeek, Business 2.0 and United Press International, among others. He can be reached by e-mail at Evan.Schuman@ziffdavisenterprise.com.
 
 
 
 
 
 
 

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