By Mark Jewell
April 14, 2007
BOSTON - Bargain shopping appears to be trumping fears about data theft
at TJX Cos., owner of nearly 2,500 discount stores that are enjoying
brisk sales despite a security breach that exposed at least 45.7 million
credit and debit cards to potential fraud.
TJX reported that sales at stores open at least a year rose 6 percent in
March, beating Wall Street's expectations. The performance extended a
recent run of sales gains since TJX three months ago announced a breach
now known to be the nation's biggest data theft.
Customers leaving a T.J. Maxx store in Boston on Thursday said the
retailer's cut-rate prices on clothing and home goods are a big enough
draw to offset any worries about lax data security. They said they don't
see TJX as any more susceptible to such theft than any other retailer.
``It's a sad thing, but it can happen anywhere,'' said Chamia Kissoon, a
30-year-old bank employee from Boston who left with a bag filled with
``Identity theft and data theft seem endemic, and I've got to presume
that since TJX is aware of this theft, that they've fixed their problem
here,'' said Peter Hartzel, a 60-year-old financial manager from Dedham,
An expert who helps corporate clients repair their reputations said he
was not surprised by TJX's strong sales amid bad publicity.
``Convenience and price are huge factors in bringing people to any
store,'' said Peter Morrissey, an associate professor of communications
at Boston University who helped advise Johnson & Johnson after product
tampering in 1982 involving its medication Tylenol. ``It's just hard to
change people's patterns.''
``And with something as mysterious as a data breach, it seems to be
remote, and beyond people's control, so customers cut you a fair amount
of slack,'' Morrissey said. ``It's almost like white noise.''
News doesn't hurt sales
TJX's 6 percent increase in same-store sales in the five weeks through
April 7 beat expectations of industry analysts polled by the research
firm Thomson Financial. They had forecast an increase of 4.6 percent at
TJX, whose stores are T.J. Maxx, Marshalls, HomeGoods and A.J. Wright in
the United States, Winners and HomeSense in Canada and T.K. Maxx in
TJX reported a 2 percent same-store gain in February and a 4 percent
gain in January. Same-store sales are a key measure of retailer
performance because they measure growth at existing stores rather than
from new ones.
TJX's sales have risen even as the company has acknowledged the breach
was worse than first thought. On Feb. 21, TJX said the breach of its
computer systems by an unknown hacker or hackers had started 10 months
earlier than initially believed, beginning in July 2005.
On March 28, TJX for the first time put a number on how many of its
shoppers' cards had been compromised: at least 45.7 million. The Privacy
Rights Clearinghouse, a consumer advocacy group that tracks data thefts,
ranks the theft at TJX as the largest such U.S. breach.
The company and the Secret Service are investigating, and the company
has said it remains unsure how many people were involved in the breach,
or whether anyone inside the company may have played a role. The only
arrests have come in Florida, where 10 people who aren't believed to be
the TJX hackers are accused of using stolen TJX customer data to buy
Wal-Mart gift cards.
But the more than 50 experts TJX put on the case have reached no
conclusions. Besides not knowing how many thieves were involved, TJX
isn't sure whether there was one continuing intrusion or separate
break-ins, according to a March 28 regulatory filing.
The company says it's too early to estimate its losses beyond the $5
million it spent through January to cover expenses such as legal and
investigative costs, and letters sent to customers who may have been
exposed to fraud.
Banks nationwide have reissued debit and credit cards to guard against
further fraud. TJX also faces lawsuits from consumers and financial
institutions, and potential fines from government investigations.
TJX's stock has fallen only slightly through the ordeal.
``Wall Street is very focused on their operating performance, and on how
this credit card issue is something that will be corrected, and then it
will be history,'' said Mark Montagna, an industry analyst with C.L.
King & Associates.
As for customers, Patrick McKeever, an analyst with Avondale Partners,
said surveys that he and others in his firm have conducted with TJX
shoppers indicate that any consumer backlash will be negligible.
``There were certainly a few people who had heard about it on the news
and decided to curtail their shopping at TJX, but for the most part,
people seemed not to be overly concerned about it,'' McKeever said.
``Consumers are well aware of the kind of value TJX offers because you
can go and see the same merchandise you would see in department stores,
and it's 20 to 60 percent cheaper. It's very compelling at the end of
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