News

Report: Target CFO calls for chip-enabled smartcards

BY Dan Berthiaume

Minneapolis – John J. Mulligan, CFO and executive VP of Target, is publicly calling for U.S. businesses to adopt chip-enabled smartcards. In a column published in the Congressional blog of political site The Hill, Mulligan said the attack on Target exposed the sophistication of today’s hackers and that the retailer had already been striving toward adopting chip-enabled smartcards, used in most of the rest of the world, before the holiday 2013 data breach.

“At Target, we’ve been working for years towards adoption of this technology,” Mulligan said in the column. “Since the breach, we are accelerating our own $100 million investment to put chip-enabled technology in place. Our goal: implement this technology in our stores and on our proprietary REDcards by early 2015, more than six months ahead of our previous plan.”

Mulligan said that by storing encrypted customer data in embedded microprocessor chips, smartcards prevent thieves who manage to steal customer account numbers from using them. He also said four-digit PIN numbers can provide further security and Target supports their use, but there is no industry consensus on whether PIN numbers should be used in conjunction with chips. He said Target has adopted smartcards in Canada, where industry estimates show total retail losses from card skimming were reduced 72% between 2008 and 2012.

Mulligan said the inability of U.S. retailers, issuers, banks and payment networks to agree on how implementation costs should be shared has been a reason change from magnetic stripe cards has been slow. He also referenced Target’s 2004 pilot of chi—enabled smartcards.

“About 10 years ago, Target piloted an early generation of the chip-enabled technology on the Target VISA REDcard, with mixed results, said Mulligan. “Notably, the cards were much more expensive to produce and required the replacement of store card-readers. Also, the technology at that time would have only been usable in our stores, making for a confusing experience for customers, overall. After three years of going it alone, we discontinued the program.

He concluded by promising Target will meet its accelerated goal for getting chip-enabled technology in place in its stores, as well as invest in protections for mobile transactions and investigate e-commerce solutions.

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FINANCE

J.C. Penney Q4 same-store sales up 2% in first quarterly gain since 2011

BY Marianne Wilson

Dallas — J.C. Penney Company on Tuesday said its same-store sales rose 2% in the fourth quarter, which included the holiday season. It was the chain’s first positive quarterly sales result since 2011.

"While 2013 brought a lot of change and challenges to J.C. Penney, the steady improvements in our business show that the company’s turnaround is on track. In spite of the significant headwinds facing all retailers this season, including unprecedented harsh weather conditions in many parts of the country, we delivered on our promise to generate positive comparable store sales growth in the fourth quarter," said Penney CEO Myron E. (Mike) Ullman.

Penney said its same-store sales increased 3.1% in the nine weeks through November and December. The retailer cited solid performances in beauty (Sephora), activewear, sweaters, outerwear, dresses, boots, men’s clothing, luggage and housewares.

“As we look ahead to 2014, our associates are encouraged by the company’s results and we remain steadfast in our focus to build on these achievements and return to profitable growth," Ullman said.

The chain said it closed its 2013 fiscal year with total available liquidity in excess of $2 billion.

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Online sales fuel Sport Chalet in third quarter

BY CSA STAFF

Sport Chalet’s digital strategy paid off in the third quarter ended Dec. 29, which saw online sales surge 22% from Thanksgiving to Christmas.

The company reported net income for the quarter of $1.5 million, or $0.10 per diluted share, compared to a net loss of $1.9 million, or $0.13 per diluted share, in the third quarter of last year.

Sales decreased 2.4% to $95.3 million from $97.6 million in the same period last year. The company said the sales decrease was fueled by the closure of three underperforming stores, which contributed $2.4 million in the same period of the prior year. The sales decrease was also due to an 11.9% sales decrease in the team sales division due to changes in personnel, and a decrease in comparable store sales. These declines were partially offset by the contribution of one new store opened at the end of the first fiscal quarter of 2014 and an increase in online sales, including mobile.

Comparable store sales decreased 1.3% for the quarter, compared to the same period last year, reflecting an overall soft holiday sales environment that began on a strong note but weakened during the final selling weeks of the year, partially due to a lack of winter weather across the company’s markets.

Online sales for the third quarter increased 8.9%, compared to the same period last year, with 47.5% of sales originating outside the four states where Sport Chalet has stores. For the period from Thanksgiving through Christmas, online and mobile sales increased 22% and 296%, respectively, from last year.

"Sales for the quarter began on an upswing in October and November, followed by a strong start to the holiday selling season as evidenced by our Black Friday Weekend and Cyber Monday sales," said chairman and CEO Craig Levra. "Despite the strong start, winter weather did not materialize in our core Western markets and continues to present a challenge to our business. That said, I am proud of our team of experts for executing against a well-defined strategy to help mitigate poor winter conditions, and thus we were able to report our most profitable quarter in the past seven years.”

Levra added that he is pleased the performance of the next-generation store in downtown Los Angeles as well as its growing online and mobile business.

“This speaks to the growing popularity of the Sport Chalet brand, our online marketing initiatives and our ability to fuse in-store engagement with online and mobile tools for every customer we serve. Mobile also contributed to our online success as sales increased 180%, albeit off a small base, spurred by the launch of a new mobile platform the week before Thanksgiving," he added.

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