One Chart Showing Why Target’s CEO Resigned

Mounting public pressure mixed with sagging profits and sales in the wake of last year’s massive data breach led to Gregg Steinhafel’s departure.

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Stephanie Stamm and Dustin Volz
May 5, 2014, 9:01 a.m.

Tar­get still hasn’t re­covered from the his­tor­ic­ally gar­gan­tu­an data heist that hit its stores na­tion­wide dur­ing last year’s hol­i­day shop­ping sea­son, as the com­pany pres­id­ent and CEO an­nounced Monday that he is step­ping down ef­fect­ive im­me­di­ately.

Gregg Stein­hafel’s de­par­ture un­der­scores how much the na­tion’s third-largest re­tail­er has struggled in the five months since hack­ers com­prom­ised 40 mil­lion cred­it- and deb­it-card ac­counts and robbed 70 mil­lion cus­tom­ers of per­son­al data, such as names, emails, and phone num­bers.

In Feb­ru­ary, the com­pany pos­ted abysmal fin­an­cial num­bers, re­veal­ing fourth-quarter profits had sunk 46 per­cent over the pre­vi­ous year. Rev­en­ue also dropped by 5.3 per­cent. Yet per­haps most telling is that Tar­get wit­nessed a 3.8 per­cent de­cline in sales, as cus­tom­ers were reti­cent to vis­it its stores dur­ing and after the hol­i­day shop­ping sea­son.

A shopping cart is seen in a Target store on December 19, 2013 in Miami, Florida. Target announced that about 40 million credit and debit card accounts of customers who made purchases by swiping their cards at terminals in its U.S. stores between November 27 and December 15 may have been stolen. National Journal

Tar­get had an­ti­cip­ated that its num­bers would be rough — and that it would be a long road to full re­cov­ery. In Janu­ary, when the com­pany an­nounced that 70 mil­lion cus­tom­ers had per­son­al in­form­a­tion robbed, it sug­ges­ted it would wit­ness “mean­ing­fully weak­er-than-ex­pec­ted sales” in its fourth-quarter peri­od that fol­lowed the data-breach dis­clos­ure on Dec. 19. Tar­get also had an­nounced then the clos­ure of eight stores.

Stein­hafel is now out des­pite mak­ing his com­pany dis­close more in­form­a­tion than leg­ally re­quired after the breach and prom­ising iden­tity-theft in­sur­ance to mil­lions of cus­tom­ers. He will con­tin­ue to stay with Tar­get in an ad­vis­ory role as CFO John Mul­ligan takes over as in­ter­im pres­id­ent and CEO. The com­pany said it was grate­ful for his “tire­less lead­er­ship” dur­ing the months after the breach.

Tar­get’s breach was the first of a num­ber of massive-scale thefts re­vealed in re­cent months, which spurred Con­gress to hold a ca­rou­sel of hear­ings that dis­cussed op­tions for bet­ter pro­tect­ing con­sumer data. Some Demo­crats have pushed for a na­tion­wide data-breach re­port­ing sys­tem in­stead of the cur­rent state-by-state patch­work of laws that com­pan­ies have said are con­fus­ing and dif­fi­cult to nav­ig­ate.

But amid wor­ries from Re­pub­lic­ans that such a step could grant too much au­thor­ity to fed­er­al reg­u­lat­ors, le­gis­la­tion has stalled.

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