Target tries to get past data breach as CEO Steinhafel steps down

Following a holiday-season data breach that potentially left tens of millions of customers exposed, Target president and CEO Gregg Steinhafel resigned Monday morning. CFO John Mulligan has taken over his role in the interim.

John Mulligan, Target
John Mulligan, Target

MINNEAPOLIS: Following a holiday-season data breach that potentially left tens of millions of customers exposed, Target president and CEO Gregg Steinhafel resigned Monday morning. CFO John Mulligan has taken over his role in the interim.

Steinhafel, a 35-year veteran of Target, has also resigned as chairman of the board of directors, while board member Roxanne Austin was appointed as interim non-executive chair. Bob DeRodes also took over as chief information officer on Monday, after Beth Jacob resigned the position in March.

The changes are effective immediately. Steinhafel will serve as an adviser during the transition.

"Most recently, [Steinhafel] led the response to Target’s 2013 data breach," Target’s board of directors said in a statement issued Monday morning. "He held himself personally accountable and pledged that Target would emerge a better company."

Brian Sozzi, CEO and chief equities strategist at Belus Capital Advisors, told Reuters the change was a few months overdue.

"I think the news today reflects Target's initiative to completely get behind this issue," he said.

Brian Yarbrough, an analyst at Edward Jones & Co., told Bloomberg: "The business has been struggling…and then you throw on top of that this massive data breach and the board probably sat down and said, ‘It’s time for some change here.’"

Between December and January, the company publicly acknowledged that the credit- and debit-card data of 40 million customers had been exposed, and a second batch with the personal information of 70 million people was also compromised. There was overlap of at least 12 million people between those two groups, the company has since said.

Last week, Target said that starting next year, it will issue branded credit and debit cards as MasterCard chip-and-pin cards as part of its $100 million effort to speed up adoption of security technology since the breach.

Burson-Marsteller supported Target on crisis communications after the data breach. A representative from the firm was not immediately available for comment or to confirm whether it was working with the company on comms for the CEO change.

A representative from Target was not immediately available for comment.

In February, the retailer reported that its profit fell about 45% to $520 million in the first quarter, compared with a year earlier, while sales dropped 3.8% to $21.5 billion. In the fourth quarter, Target spent $61 million on expenses related to the breach.

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