The first cost estimate of Target's 2013 data breach is publicly revealed.
U.S. retailer Target has revealed additional details into the impact of its 2013 data breach, which affected 70 million customers.
In a statement
providing some preliminary guidance on Target's second-quarter fiscal 2014 earnings, the company revealed that it will be taking a charge of $148 million in expenses related to its data breach.
Target first disclosed on Dec. 9, 2013, that it was the victim
of a data breach at its stores. The breach occurred between Nov. 27 and Dec. 15 of last year and was first thought to affect 40 million customers. Target later revised the impact to 70 million customers.
Target noted that the $148 million of breach-related expenses will be partially offset by an insurance receivable of $38 million.
Breach-related expenses for Target come in a number of areas, including claims made out to payment card networks. Target's estimate of $148 million is just that—an estimate—as the money has not yet been paid out.
"Given the varying stages of claims and related proceedings, and the inherent uncertainty surrounding them, the Company's estimates involve significant judgment and are based on currently available information, historical precedents and an assessment of the validity of certain claims," Target stated.
Target warns that its estimate for costs could actually increase as new information becomes available.
"Since the data breach last December, we have been focused on providing clarity on the Company's estimated financial exposure to breach-related claims," John Mulligan, interim president and CEO and CFO of Target, said in a statement. "With the benefit of additional information, we believe that today is an appropriate time to provide greater clarity on this topic."
Mulligan stepped into the role Target CEO after former CEO Gregg Steinhafel announced
in May that he was leaving the company. Steinhafel wasn't the only executive loss stemming from the data breach; Target's former CIO Beth Jacob also resigned
followed the breach.
Target isn't the only recently breached vendor that has been providing insight into the associated costs. eBay recently provided some insight
into the financial impact that its data breach has had on consumers. In eBay's case, the company found that user activity levels had fallen after the breach, which led in turn to a decline in operating margin.
Sean Michael Kerner is a senior editor at
InternetNews.com. Follow him on Twitter @TechJournalist.