Nearly a year has passed since the revelation that a massive security breach exposed personal information of more than 100 million Target (TGT, Financial) customers. The immediate effect was predictable. Customer traffic flow declined dramatically.
How is the Minneapolis-based retailer doing now?
Well, the price of a share of stock dropped precipitously after the breakdown was reported to the general public. On Nov. 15, 2013, Target stock sold for $66.89, then plummeted almost 18% to $55.07 by Feb. 4, 2014. The price fluctuated wildly in the spring and summer before reaching its current level. Target has regained more than half the ground it lost as a result of the security breach.
Attention seems to have shifted away from Target in recent months.
Target’s leading competitor, Walmart (WMT, Financial), has had a few missteps. While it isn’t at the same level as Target’s security breach, Walmart has had some negative publicity that called into question the retailer’s sensitivity and perhaps the judgment of its management. Last week, Walmart apologized for and removed a Halloween costume category called “Fat Girl Costumes” from its website; a few days later, it had to do the same with another costume, “Pashtun Papa,” that was listed on its website. Walmart claimed the second costume was sold by a third-party vendor and apologized for its appearance on the site. Nothing was said about who may have been behind the posting of the “Fat Girl Costumes” category.
In the last month, Walmart has seen the price of a share of its stock drop less than 3%, from $78.29 on Oct. 10 to $76.19 today.
Meanwhile, Target’s publicity lately has been more positive. A video of a teen-aged Target employee at work, apparently from Texas and known to the public only as “Alex from Target,” has become an Internet sensation. No one has said much about Target's security breach in months, especially after a more extensive one was reported at Home Depot in September.
In its Q2 2014 earnings report, Target said its digital sales went up more than 30%. “Second-quarter GAAP EPS reflects an accrual for what the company believes to be the vast majority of actual and potential claims related to the December 2013 data breach,” the company said.
Quarterly results “didn’t meet our expectations,” said John Mulligan, executive vice president and CFO, but “we are seeing some early signs of progress.”
Target has been praised recently as an S&P 500 Dividend Aristocrat, defined as a company that regularly raises its dividend payout, outperforming the market. Its earnings per share are estimated to go up more than 40% by 2016.
Twelve of the gurus we follow at GuruFocus traded in Target stock at the end of June. Charles Brandes (Trades, Portfolio) added Target stock to his portfolio while six others – Richard Snow (Trades, Portfolio), Dodge & Cox, Zeke Ashton (Trades, Portfolio), NWQ Managers (Trades, Portfolio), James Barrow (Trades, Portfolio) and Joel Greenblatt (Trades, Portfolio) – increased their existing holdings.
Wallace Weitz (Trades, Portfolio), Jeremy Grantham (Trades, Portfolio) and John Hussman (Trades, Portfolio) reduced their stakes in Target. Jim Simons (Trades, Portfolio) and Manning & Napier Advisors Inc. sold all of their Target stock.
