Stormy Weather
Customer confidence is at risk when a data breach occurs.
When TJX Corp. reported lower profits for the first quarter of 2007, CEO and president Carol Meyrowitz said "comparable store sales results in April were below our expectations, which we attribute to the unseasonably cold and wet weather across most regions of the country during the first half of the month."
Was she actually blaming April showers--not the biggest credit-card number heist in history--for disappointing sales at TJX discount stores T.J. Maxx, Marshalls, Bob's Stores and others?
But Meyrowitz's comment was not far-fetched.
"It's almost impossible to correlate a security breach to retail sales," says John Pescatore, a vice president at Gartner. Weather patterns, layoffs, expansion, fuel costs and yes, well-publicized security breaches--all of these affect a company's bottom line to varying degrees.
Indeed, it's safe to say that some of TJX's longtime customers will continue to shop at its stores. Yet others will view T.J. Maxx with suspicion for months or years to come, undermining decades worth of efforts to promote TJX's brands.
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Michael S. Mimoso, Editorial Director
This was first published in July 2007