The data breach isn't going to put Target out of business on its own but the downward spiral is beginning for Target. If you look at all of the writing on the wall, things aren't going well.
First of all, look at their stock price. They were doing a good job of artificially inflating for quite a while through their stock buy back. They even got it as high as $75 at one point. Now it's in the high 50s and final fourth quarter earnings report is only going to further tank that price. The economy as a whole is turning around but Target is down in same store sales 2.5%. It shouldn't be that way.
Now we have 2 major announcements this week, the 475 layoffs and the healthcare. Obviously the big news of things not going well but there's also the future growth which isn't getting reported. They are planning on opening a mere 10 stores this year, and more importantly are closing a total of 12 stores.
http://tcbmag.com/News/Recent-News/2014/January/Targets-Plans-Now-Call-For-10-New-Stores,-12-Clos A net loss of 2 stores. Realistically speaking that's basically no growth but that's a significant slowdown versus what we have seen I the last few years in terms of growth.
Target Canada, for all intents and purposes has been a massive failure. Originally the projections were it would reach profitability in 2015, which was already troubling. Now, with a net loss of $800 million, it might be even further off before Target Canada reaches profitability, if ever.
http://m.theglobeandmail.com/report...ow-years-away/article16286817/?service=mobile The problem I can also see is that whereas other companies like Walmart and Sears set up their Canadian sectors as wholly owned subsidiaries, Target didn't do that. Why is that important? When starting a new business venture you want to set up a new company to limit your liability in case things go wrong. So what does a big corporation typically do? Set up a second company with all of the shares for the new company being owned by the parent corporation. Provided that the new company is sufficiently funded with assets and insurance then it's very unlikely the losses from the new company will be attributed to the parent corporation. It's a very good way to make sure a new business venture's losses don't extend beyond the initial startup capital. Why Target didn't do this is still a question I can't figure out. Nevertheless, as likely as a Target Canada failure seems to be at this point, it will have dire consequences for the corporation as a whole.
No one thing is going to put Target out of business, particularly this credit breach, but when you look at all the writing on the wall, the outlook is bleak. By the way, if you think I'm full of it, Kmart once had one and half times as many stores as Target does right now. They owned Builders Square, Borders Books, Waldenbooks, Office Max, and Sports Authority. They were massive and it all started falling apart within a very short period of time. They've been on life support ever since. This year they have no growth, within a year or two you'll see significant closures in Canada, then America. Unless something significant changes you can count on Target being headed out soon.
