Target Customers Ready to Forgive and Forget, Poll FindsMatt Townsend
Many Target Corp. customers are ready to forgive and forget.
Following a data breach over the holiday season that affected millions of shoppers, only 7 percent of customers plan to reduce spending at the chain over the next year, according to a Bloomberg National Poll. The survey, conducted May 8-11, also found that Target’s decision to replace its chief executive officer this month had little effect on consumers’ desire to shop at the chain.
The results suggest Target may be able to regain the loyalty of customers after the theft of 40 million payment-card numbers by hackers. When the incident became public in December, it hurt Target’s reputation and contributed to a drop in fourth-quarter sales. Chief Financial Officer John Mulligan was named interim CEO on May 5, replacing Gregg Steinhafel, who held himself personally accountable for the breach.
Despite the turmoil, 85 percent of customers expect to shop about the same amount at the chain over the next year, the survey found. Seven percent will spend more, and 7 percent will shop less. One percent had no opinion. The results had a margin of error of as much as 4.5 percentage points.
About half of customers are confident that Target will be able to keep credit and debit-card information safe from here on in, the survey found. The removal of Steinhafel, meanwhile, made no difference for 84 percent of the 1,020 people polled. Eight percent said they would likely make more purchases at Target after the CEO change, while 7 percent it would reduce their spending.
In an effort to improve its image, Target is introducing new commercials that focus on its philanthropy and business practices. The ads, which were posted online last week, include a one-minute spot on how its donations help public schools.
While shoppers may be getting over the data breach, the Minneapolis-based retailer faces additional hurdles. Online competition is growing, and Target’s expansion into Canada racked up almost $1 billion in losses last year.
The chain will report first-quarter results on May 21. Analysts estimate that sales increased about 2 percent to $17 billion from a year earlier. Excluding some items, earnings are seen declining to 71 cents a share, according to data compiled by Bloomberg.
Separately, Target said today that Mulligan will get a raise for filling in as interim CEO. His salary will increase to $1 million from $700,000, and he’ll receive a one-time, $1 million grant of restricted stock units, according to a filing.
Steinhafel, who agreed to remain as an adviser through Aug. 23, will receive the same base salary and benefits he had as CEO and will remain eligible for a short-term incentive bonus based on Target’s performance. He’ll receive about $7.22 million in severance, the company said in a separate filing.
Target’s shares rose 0.1 percent to $58.29 at the close in New York. The stock declined 18 percent in the past 12 months, compared with a 13 percent gain for the Standard & Poor’s 500 Index.