TJX Suffers Declining Profit in Q1 2007
TJX Cos. has suffered a 1 percent drop in its profits in the first quarter this year. The discount retailer including T.J. Maxx and Marshalls stores said this on May 15, 2007. The loss is attributed to the record charge of $12 million due to an enormous data breach.
The company that owns nearly 2,500 stores still recorded a 6 percent growth in quarterly revenue. This was because a number of customers remained high despite the publicity of the company's data theft.
The publicity language suggests that the issue of data hack may continue for long placing the discount stores in an adverse position. According to TJX, it has been victim to computer intrusion since January 2007 and had its data compromised that involved 45 million credit and debit cards.
The retail company said it would spend more for the ongoing investigation, for improvement of computer systems and their security, as well as for technical, legal and other fees. The company anticipates the total additional cost will be at 2-3 cents per share in Q2.
In addition to these costs, TJX said it couldn't estimate the losses arising due to other reasons because of non-availability of sufficient information. The company, however, expects the losses to arise mainly from information breach that includes opening up to banks and payment card companies, exposure in various pending and possible legal proceedings, related fees and costs, and many potential liabilities.
The company refused to accept questions about its ongoing investigation. However, it discussed the expenses incurred to enhance the security of its computers, to notify its customers, and to spend on legal issues.
According to some analysts, the breach would not affect the company in any major way. For, its sales figures don't indicate that shoppers are staying away from the stores.
Police continues to investigate the case. Till now only a group of individuals in Florida have been charged for manufacturing credit cards from the original data of TJX. The breach has been the largest on record and banks have slated the company because they have to spend millions of dollars to replace the compromised accounts.
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» SPAMfighter News - 25-05-2007