TJX takes $118m hit over massive security breach
$2.60 each for exposed credit card
TJX, the American retail giant, has set aside $118m to cover costs and potential liability arising from a security breach to its database systems.
Crooks gained access to 45.6m credit and debit card records during the breach, which lasted 17 months between July 2005 and January 2007. TJX's $118m after-tax cash charge for Q2 2008 includes $11m in security consultancy fees and other expenses directly related to the attack and a contingency fund of $107m to cover liability payments arising from pending lawsuits.
In addition, TJX expects to chalk up non-cash charges of approximately $21m for FY2009.
The funds set aside by TJX are a fraction of the $1bn-plus losses estimated by analyst firms, and much less than guesstimates from security consultancies, who have a clear axe to grind in talking up the financial impact of security breaches. Tellingly, investors haven't marked down TJX share price significantly in the expectation of major losses down the road.
TJX announced the impact of the intrusions into its systems on its bottom line as it announced Q2 2008 results. Net sales for Q2 2008 were up nine per cent to $4.3bn, resulting in an income of $59m. ®