1-10-14 1:46 PM EST | Email Article
By Paul Ziobro and Ben Fox Rubin 

The data breach that hit Target Corp. over the holidays was bigger than the company had previously said, affecting more systems and compromising a new set of personal information for 70 million people.

Target said Friday that the new set of stolen information included some mix of names, mailing addresses, phone numbers and email addresses. The information was stored separately from the 40 million credit and debit card accounts that the discount chain had previously said were affected, indicating that a different system had been hacked.

The retailer said there was some overlap between the two sets of stolen data but didn't say how extensive it was. The entry point for the attack has been identified and closed, spokeswoman Molly Snyder said.

The new disclosure came just as Target said it was starting to see a recovery from the damage done to sales by the original news of the breach. On Friday, Target cut its profit forecast for its U.S. stores in the quarter ending Feb. 2 by about 20% and said sales excluding newly opened or closed stores would fall 2.5% when it previously had expected sales to be flat.

The company said sales had been stronger than expected until it disclosed the breach on Dec. 19. It said sales were meaningfully weaker after the disclosure, but that they had shown improvement in recent days. The company offered a 10% discount to U.S. shoppers during the last weekend before Christmas in an effort to lure customers back into its stores.

Target said just before Christmas that apparent thieves had broken into its point-of-sale system and stolen credit and debit card data in a hack that went on for two weeks, including the crucial Black Friday weekend after Thanksgiving.

Target, along with the Secret Service, the U.S. Justice Department, and a forensic unit of Verizon Communications Inc., continue to investigate the breach. A number of states are looking into the breach as well. On Friday, New York Attorney General Eric Schneiderman said the new disclosure was "deeply troubling."

The company had said the data breach, which ran from Nov. 27 and Dec. 15, involved malicious software installed in the system where cards are swiped at cash registers. In late December, the company added that encrypted debt card PIN data also was stolen in the breach. Now, it says the breach went beyond that system to one that stored the personal data.

The information about the 70 million customers was accessed during the same time period, but it included data Target had collected for a longer time during the normal course of business, said Ms. Snyder, the spokeswoman. She wouldn't say which other system was affected.

Target said Friday that much of the new set of stolen data is "partial in nature." Emails, addresses and phone numbers are already public or semipublic. Hackers, however, often use email addresses and knowledge of people's interests or connections to craft fake emails to lure the recipients into disclosing sensitive information.

Card customers aren't responsible for unauthorized charges on their accounts.

The retailer hasn't provided any estimate of costs related to the breach, which could include reimbursements to card networks to cover fraud and the cost of issuing new cards, lawsuits and legal costs associated with the various investigations. The costs could significantly hurt the company's results, Target said.

Target also has offered a year of free monitoring and identity theft protection to anyone who shops in its U.S. stores--a number the company puts at 30 million people weekly.

The data breach has crimped Target's efforts to sign up more customers for its in-house credit and debit card, a key part of its strategy to keep customers from defecting to competitors like Amazon.com Inc. Target has told cashiers to stop asking shoppers if they want to sign up for the card, called the RedCard, because it would be "insensitive," spokesman Eric Hausman said. Customers can still ask to sign up for RedCards in store or online.

Target has found that shoppers increase their spending at Target by 50% or more after they sign up for the card. It offers 5% discounts on nearly all purchases and, like Amazon Prime, free shipping on purchases from Target.com.

Robin Sidel and Sara Germano contributed to this article.

Write to Paul Ziobro at paul.ziobro@wsj.com


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(END) Dow Jones Newswires

January 10, 2014 13:46 ET (18:46 GMT)

Copyright (c) 2014 Dow Jones & Company, Inc.
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