Target Breach Affected Up to 110 Million Customers

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Bits Blog: Target Customer Information Shows Up on the Black Market

Douglas J. Dayton, First President of Target, Dies at 88

The cause was cancer, his family said.

Mr. Dayton was one of six grandsons who went into the family business started by George D. Dayton, a New York banker and real estate investor. George Dayton moved to Minnesota in 1881 and by 1903 had established the Dayton Dry Goods Company.

Six decades later, after the dry goods store became a department store called the Dayton Company with locations around the Twin Cities, Douglas Dayton was made president of the company’s new subsidiary, a discount chain.

In May 1961, a year before the first Target store opened in Roseville, Minn., Mr. Douglas told The Minneapolis Tribune that the company would “combine the best of the fashion world with the best of the discount world, a quality store with quality merchandise at discount prices.”

By the next year, customers in Duluth were so impressed that they began calling their store “Tarzhay.” Mr. Dayton soon boasted to his skeptical brothers that Target would become a $100 million business.

It did in 1968. By 1975, Target had become the family company’s top revenue producer. By the late 1970s, its revenue exceeded $1 billion.

Even when competitors like Kmart initially grew at a faster rate, Mr. Dayton expressed confidence in Target’s strategy.

“I am thoroughly convinced that we are selling a superior product that will bear the test of time,” he told other executives in 1968, according to “On Target: How the World’s Hottest Retailer Hit a Bull’s-Eye,” a 2003 book by Laura Rowley.

Mr. Dayton left Target in 1968 to become vice president of the parent company, which had been renamed the Dayton-Hudson Corporation after a merger with another department store chain. By the late 1970s, most of the Dayton family members had given up their management positions. Douglas Dayton left the company in 1972. From 1974 to 1994 he ran a venture capital firm, Dade Development Capital.

In Target’s early years, Mr. Dayton worked closely with another executive, John F. Geisse. In 1982, Mr. Geisse helped found another discounter, the Wholesale Club, which later merged with the Sam’s Club division of Wal-Mart.

Douglas James Dayton was born on Dec. 2, 1924, in Minneapolis, the youngest of five brothers. His father, George N. Dayton, became president of the family business in 1938. Douglas Dayton graduated from the Blake School and attended Amherst College before joining the Army in 1943.

His survivors include his wife, Wendy; three sons, David, Steve and Bruce; a stepdaughter, Elizabeth; six grandchildren; and a brother, Bruce, who served on the board of Target until 1983.

Gov. Mark Dayton of Minnesota is Douglas Dayton’s nephew.

Target Cuts Outlook as Profit Drops 26%

NEW YORK — Target Corp. reported a 29 percent drop in first-quarter profit as unusually cool spring weather and financial pressures chilled customers' appetite for spending.

The company, based in Minneapolis, also on Wednesday cut its annual profit outlook, sending its stock down.

Target is the latest in a string of companies including rival Wal-Mart Stores Inc. that say bad weather and financial pressures like the higher payroll tax have squeezed business in the first couple months of the year.

While chilly weather was a big factor in depressing sales of spring clothing and other seasonal goods, Target said that a yo-yo economic recovery has continued to make shoppers stick to shopping lists and plan their spending.

"We remain cautiously optimistic about both the macroeconomic environment and consumer behavior," Gregg Steinhafel, chairman, president and CEO, told investors in a call after the earnings report. "Both of these business drivers continue to reflect slow, uneven growth and ongoing cross-current of positive and negative indicators, just as they have for the past few years."

In fact, while the housing market is showing signs of recovery and claims for unemployment insurance have been declining, shoppers, particularly younger customers, are still facing a weak job market, Steinhafel said.

A big hurdle for many low-price retailers has been tax changes. An increase in the payroll tax of two percentage points, which took effect Jan. 1, means that take-home pay for a household earning $50,000 a year has been sliced by $1,000.

Target said Wednesday that three-quarters of its customers surveyed were aware of this year's payroll tax increase. Among those, a majority have noticed the impact of the tax increase on their paychecks and indicate it's affecting their spending.

Still, Target, whose sales growth has been uneven since the recession, remains confident in its strategies to attract shoppers.

Target has reached out to customers with two big growth initiatives. It has been offering a larger selection of food and also a program, started in 2010, that gives shoppers a 5 percent discount when they pay with Target-branded credit and debit cards.

At the same time, Target continues to team up with new designers for limited-time partnerships. Earlier this month, Target announced its latest designer collaboration, with Phillip Lim. The collection is due out in September.

Last year, Target expanded into urban markets using smaller versions of its big-box stores in Seattle, Los Angeles and Chicago.

Target also started to expand into Canada earlier this year, its first foray outside the U.S. The company is opening the stores in waves that should add up to about 125 stores at locations once owned by Canadian retailer Zellers by the end of the year. During the first quarter, it opened 24 stores in Canada, and plans to open 20 more later in the second quarter.

Target said it earned $498 million, or 77 cents per share, for the three months ended May 4. That compares with $697 million, or $1.04 per share, a year earlier.

Excluding items related to its Canadian expansion and retirement of certain debt, the company earned $1.05 per share.

Sales rose 1 percent to $16.71 billion.

Analysts had expected earnings of 95 cents per share on revenue of $16.82 billion.

Revenue at stores open at least a year slipped 0.6 percent as the number of transactions fell 1.9 percent. That's considered an important measure of retail performance because it strips out the effect of stores that open or close during the year.

Target says that measure should improve to anywhere from a 2 percent to 3 percent gain in the current quarter. And while traffic should improve, it will continue to be challenging, Target told investors.

Target expects that adjusted earnings per share will be in a range between $1.09 and $1.19 for the current quarter.

For the full year, the company now expects $4.70 per share to $4.90 per share. That's down from its original guidance of $4.85 per share to $5.05 per share.

Analysts had forecast $1.11 per share for the second quarter and $4.63 per share for the year.

The results come a week after Wal-Mart, the world's largest retailer, reported that its first-quarter profit edged up just slightly, and the company struggled with a sales malaise in its namesake business.

Revenue at stores open at least year at its namesake U.S. business dropped 1.4 percent, the first decline since the second quarter of 2011.

Wal-Mart also offered a quarterly profit outlook that came below Wall Street's projections. Wal-Mart blamed a litany of factors affecting its budget-conscious customers, including a payroll tax increase, delayed tax refunds, job worries and bad weather. The company did say that sales this month have been rebounding.

Target's stock dropped 4 percent, or $2.86, to close at $68.40 Wednesday.

Target to Match Some Rivals' Online Prices Year-Round

The move extends an online price-matching program that Target introduced over the holiday season and which was supposed to last only from November 1 to December 16. It also comes after Target last week reported flat sales growth in December at stores open at least a year.

"I think this is largely symbolic, it's akin to removing the Kindle from their stores," said Wells Fargo analyst Matt Nemer, referring to Target's decision to stop selling Amazon's tablet devices last year.

In November, Chief Executive Gregg Steinhafel said Target was not seeing a lot of price-match activity in its stores.

"It's not likely to have a huge impact on financials or customer behavior," said Nemer, who noted that customers are not likely to go to Target's guest services desk for a refund for just a small difference in price.

Also, much of what Target sells, such as apparel and accessories, is exclusive to the store, so there would be no comparable prices from competitors.

But Target will now also match prices year-round from its own website in its stores.

Nemer called that "a really important step," saying it removes confusion for customers who sometimes see different prices for products such as televisions in stores and online.

While shopping online has grown rapidly in recent years, it still represents a small fraction of overall shopping in the United States. Target's policy of matching online prices differs from policies at several chains, which match only printed advertised prices for items sold at stores.

Target said that throughout the year it will match the price when a customer buys an eligible item at one of its stores and finds the same item at a lower price in the following week's Target circular or in a local competitor's printed ad. It will also match the price if the customer finds the same item at a lower price within a week on Target's website or the websites of Amazon, Walmart, Best Buy and Toys R Us.

Amazon says it offers competitive prices and does not offer price matching when an item's price drops after a customer buys it, with the exception of televisions. Walmart matches the prices of print ads from competitors and said it has no plans to change its policy. Walmart also says it checks the prices of 30,000 items at competing chains each week to make sure it has the lowest prices.

Best Buy matches the price from a local competitor's store, a local Best Buy store or its own web site. Toys R Us matches in-store prices and certain online prices.

Shares of Target were down 60 cents at $60.70 in afternoon trading on the New York Stock Exchange.

(Reporting By Jessica Wohl in Chicago and Phil Wahba in New York; Editing by Alden Bentley and John Wallace)