Target Battles Weather, Data Breach Fallout in 1Q

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May 21 (Bloomberg) -- Bloomberg’s Julie Hyman and Elizabeth Dexheimer examine first-quarter results from Target as net income fell short while the company battles back from the customer data breach that hit the retailer during the last holiday shopping season. They speak on Bloomberg Television’s “In The Loop.”

You have a disconnect between the sales and the profit numbers.

Sales in the first quarter fell, but this is not as bad as analysts had feared.

And the first quarter was a tough quarter for everyone.

This is not uncommon but profit missed estimates, in the first quarter and target is also coming out with a second-quarter forecast that is below estimates and cutting the full-year forecast.

This does seem to deal at least partly with repercussions of the data breach, and the company said in a statement they cannot really offer an exact estimate of exactly how much is going to cost in the end.

When you talk to analysts, do they think that the data breach is behind this?

It is on top of so many other issues and when the ceo said he was leaving -- most of the people i spoke to said it is not about the reach.

This is just the straw that broke the camels back.

If you look at the list, yes, the data breach.

In the canadian division and the head of that division -- that took lace yesterday.

The lack of freshness is something a lot of analysts talk about.

This is not what customers are looking for and it also ties into the commerce game.

And even though both have about the same percentage of their overall sales coming online, target is behind the game in terms of how things look and offering in-store pickups, waited to do that with walmart and other competitors and they have to get that new, permanent ceo.

Your expertise as well with target, migrating to chips -- this is something that they use a lot, in terms of credit cards.

Can target accelerate in the u.s.? the term that is often used is a wake-up call.

To upgrade card security to make the transition to chip technology.

That is because the reason the u.s. has been slow to adapt to technology is cost.

It has been slow for the banks and retailers with interesting technology, this is a huge task and there has not been a business case -- for going through that transition and now there is.

They are looking at target and the fallout, with a reputation challenge for the company and what is the impact they have on management, saying i don't want to be the next target.

Tell us how this actually work's, how much they have to upgrade and how much this costs.

At the end of the day, who is responsible?

The cost estimates that we have seen, the cost for hardware -- for the new cards and the hardware -- it would be the retailers, this has been estimated to be about 10-11,000,000,000 dollars.

This does not include software costs.

But then you look at how target has costs of about half $1 billion.

That is how big of a cost it is for the bank.

Talking to analysts, they talk about the upgrade.

Do we see that in the short term ? i had not heard analysts talk about this as an essential problem.

If i could ask the question -- when you get the cards with new technology, do you still have to have your old cards?

How is this going to work?

The bank will be reissuing the new cards with new technology.

The chip is the central component but there is a new verification measure.

There is a signature that customers are used to, where they pay something and sign their name, the other thing is interesting that -- entering the pin number.

You can use the additional layer of security if your card is stolen.

When they reissue the card, not every point of sale is going to have upgraded their system.

So will this card still work, not an target but in walmart or something?

That is why this is so

This text has been automatically generated. It may not be 100% accurate.

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