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Target CEO exits in wake of data breach

The front door at a Target store in Fairfax, Virginia on November 24, 2011
Two young men walk past a Target store in Fairfax, Virginia, November 24, 2011

US retail giant Target announced Monday that chief executive Gregg Steinhafel was stepping down, nearly five months after hackers stole data on potentially more than 100 million customers.

Steinhafel, chief executive since 2008, will resign immediately as chief executive and chairman of the board. Chief financial officer John Mulligan has been appointed interim CEO, the company said.

"After extensive discussions, the board and Gregg Steinhafel have decided that now is the right time for new leadership at Target," the company said in a statement.

In December Target, the third-largest US retailer in 2012 with total sales of $73.3 billion, disclosed that hackers successfully infiltrated the company's information systems, obtaining credit card data for some 40 million customers.

In January the company revealed that the hackers stole an additional trove of data with personal information such as home and email addresses for up to 70 million customers.

The data breach, one of the biggest in retail history, hit sales during the critical holiday shopping period and spurred congressional hearings on the vulnerability of customer information in an era of increasingly sophisticated hacking efforts.

Sales fell 6.6 percent across the company's nearly 1,800 stores in the United States in the fiscal fourth quarter, covering the three months to February 1, 2014, hurt by both the data loss and heavy discounting during the holiday season. Sales fell 0.9 percent for the full year.

In the wake of the breach Steinhafel quickly moved to shore up customer confidence, green-lighting plans to provide free credit monitoring and identity-theft insurance to shoppers.

"Gregg led the response to Target's 2013 data breach. He held himself personally accountable and pledged that Target would emerge a better company," the company said.

Last week Target recruited a new executive vice president in charge of information technology transformation, and said it continues to search for a new chief information security officer.

It said Monday that board member Roxanne Austin will serve as interim non-executive chair of the board.

In addition, Steinhafel has agreed to serve the company as an adviser during the transition.

The retailer expanded steadily under Steinhafel, who took over the top job as the country plunged into its deepest recession since the 1930s.

He added more tha 100 stores in the United States and, last year, 124 in Canada, taking the total to 1,917. The company employs 361,000 workers.

In its fourth-quarter report, Target booked a $17 million net charge on costs for the data breach, but warned that it could not estimate future costs that might stem from claims for customer losses and payments for civil litigation and investigations.

"These costs may have a material adverse effect on Target's results of operations in first-quarter and full-year 2014 and future periods," Target said at the time.

Target shares fell 1.2 percent to $61.28 in opening trade Monday. They sank from about $66.50 just ahead of the first revelation of the data breach in December, falling to nearly $55 in February before rebounding.

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