NEW YORK (TheStreet) -- Sales are starting to recover at Target (TGT - Get Report) after a massive security breach over the holiday season potentially affected up to 110 million customers, the retail chain said on Wednesday.
"While we can't yet assess the full impact of this crime ... We are pleased that sales have started to recover" following the breach, CEO Gregg Steinhafel said on this morning's conference call.
Still, it will be some time before customers fully start coming back to shop.
The data breach has "shaken their confidence," Steinhafel said.
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Target is working to rebuild customer trust. The company said it plans to invest in REDcard promotions and other strategies to bring guests back into the store.
Target is also looking to spend roughly $100 million to invest in Target-branded chip-enabled credit cards.
The company said it expects first-quarter sales comps to be flat to down 2%.
So far, February comparable-store sales are "running in that range, ahead of our forecast," Chief Financial Officer John Mulligan said during the company's conference call. Target's comps for the first quarter of last year fell 0.6%.
For the current quarter, management said it expects adjusted earnings of between 60 cents and 75 cents a share and full-year earnings of $3.85 to $4.15 a share. Analysts surveyed by Thomson Reuters forecast 85 cents and $4.15 a share, respectively.
Shares of Target jumped 7.4% to $60.69 following the discount retail chain's better-than-expected earnings report on Wednesday.
Over the three months to Feb. 1, the retailer earned $520 million, or 81 cents a share, down from $961 million, or $1.47 a share, in the year-ago quarter. Analysts had expected 79 cents a share, according to Yahoo! Finance.
Target's revenue fell 5% to $21.5 billion, while U.S. comparable-store sales decreased 2.5%, consistent with prior guidance and slightly worse than analysts' expectations of a 2.4% decline. The company said it saw "meaningfully softer" sales following the announcement of the data breach on Dec. 19.
The company incurred $17 million of expenses in the fourth quarter related to the data breach, which reflected $61 million of total expenses offset by a recognition of $44 million in insurance.
The expenses included "costs related to investigating the data breach, offering credit-monitoring and identity-theft protection services to guests, increased staffing in call centers, procurement of legal and other professional services, REDcard fraud losses and card replacement costs, and an accrual for a probable loss on payment card networks anticipated claims for operating expenses incurred as a result of the data breach,"' the company said.
Target said it is not able to estimate future expenses related to the data breach, but said they could have a material adverse effect on Target's earnings in the first quarter and 2014 fiscal year.
Future expenses may include "payments associated with potential claims by the payment card networks for alleged counterfeit fraud losses and non-ordinary course operating expenses (such as card re-issuance costs), REDcard fraud and card re-issuance expense, payments associated with civil litigation, governmental investigations and enforcement proceedings, expenses for legal, investigative and consulting fees, and incremental expenses and capital investments for remediation activities," it said.
-- Written by Laurie Kulikowski in New York.