The Cost of Target’s Data Breach

Almost eight months after Target first revealed a data breach had compromised millions of its customers’ credit and debit card information, the company is drilling down on what exactly the hack will cost shareholders (other than a CEO and a substantial dose of consumer trust). The number is $148 million. Minus a $38 million insurance receivable that amounts to an 11 cent cost per share in the second quarter.

Target now anticipates second quarter earnings per share to be around 37 cents on a non-GAAP (generally accepted accounting principles) basis. This reflects the data breach expenses, as well as 27 cents of net interest expenses from a debt retirement program in which the company paid $1 billion to retire $725 million of long-term debt.

Excluding these and other onetime expenses the company anticipates adjusted earnings per share to come in around 78 cents, five cents short of Wall Street analysts’ consensus estimate and sharply lower than the 85 cent to $1 guidance Target issued in its first quarter earnings report. In that report the company sharply cut its full year earnings guidance. In a statement out Tuesday, the company wrote that it will provide more details on its fiscal 2014 expectations in its official second quarter earnings release scheduled for Wednesday, August 20. In the first quarter Target said it expects adjusted earnings per share to come in between $3.60 and $3.90 for the full year.

Shares were down about 4% in morning trading Tuesday sinking as low as $58. Adding to investor trepidation was Target’s disclosure that U.S. sames store sales were “essentially flat” with lower than expected margins thanks to markdowns. The company also said the Canadian sales were light, exacerbating an excess inventory problem. Target shares are down around 7.7% year-to-date including Tuesday’s decline.