The 35-year veteran of target was captain of the ship when it was first revealed in December that 40 million customers were at risk when hackers broke into Target Corporation (NYSE:TGT)’s customer database, stealing confidential information. In January that number increased to 70 million customers affected.
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Media reports indicate a primary issue with Stenhafel is the performance after the breach was discovered, but no official source has indicated as such. As previously reported in ValueWalk, Target technical employees had received a warning about the breach of the internal security system days before customer’s data was compromised and the company faces negligence lawsuits. Target later declined to include any negative impact of the event in its earning statements, as reported in ValueWalk.
Steinhafel left “after extensive discussions, the board and Gregg Steinhafel have decided that now is the right time for new leadership at Target,” a company statement posted on its website Monday morning said.
“The last several months have tested Target in unprecedented ways,” Steinhafel said in a letter to the board of directors posted Monday. From the beginning, I have been committed to ensuring Target emerges from the data breach a better company, more focused on delivering for our guests.”
Addressing the issue
In the wake of the resignation, John Mulligan, Target’s chief financial officer, will serve as interim president and CEO. In the aftermath of the crisis, Target adopted a faster timeline for switching to more secure chip-based credit and debit cards currently used extensively throughout Europe. Target announced last week that it all of its store-branded cards would be reissued as MasterCard chip-and-pin cards in 2015, a move that highlights a $100 million effort to improve security. Target also appointed a new chief information officer. Bob DeRodes takes over the position today after former CIO Beth Jacob who stepped down in March.
Target: Stock positives
Analysts covering the stock were quick to praise the move and pointed to a rebound.
“While we’ve always held Mr. Steinhafel in the highest regards, our net/net takeaway is that today’s announcement that he will be leaving the CEO post is a positive development longer-term for the company,” said Sterne Agee analyst Chuck Grom. “To this end, beyond the credit breach last December, the company’s U.S. business has eroded in recent years and its foray into Canada appears to be far below plan. The bottom line: a change was needed at Target. As for the stock, we would expect shares to react positively to the news.”
In the short term Target Corporation (NYSE:TGT) stock was down nearly 3% on the day to trade at $60.15 in early morning activity.