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Security Costs Weigh on TJX

Discount retailer the TJX Cos. Inc. said Tuesday that first-quarter earnings fell 1 percent as costs related to a security breach of customer data weighed down results.

Discount retailer the TJX Cos. Inc. said Tuesday that first-quarter earnings fell 1 percent as costs related to a security breach of customer data weighed down results.

For the three months ended April 28, earnings dipped to $162.1 million, or 34 cents a diluted share, from $163.8 million, or 34 cents, in the year-ago period. Excluding an aftertax charge of $12 million, or 3 cents a share, in connection to the previously reported computer intrusion, earnings were up 9 percent to 37 cents a share — in line with the company’s estimate.

Sales for the quarter increased 6 percent to $4.11 billion from $3.87 billion, while total same-store sales rose 2 percent.

“We achieved these results despite comparable-store sales that were slightly below plan, which we attribute to the unseasonably cold and wet weather in many U.S. regions during March and April,” said Carol Meyrowitz, president and chief executive officer, in a statement.

In January, the company said its computer systems that process and store sales transactions were hacked and customers’ information was stolen. During the second quarter, the company expects to incur costs of 2 to 3 cents a share to investigate the intrusion and enhance computer security systems, as well as pay technical, legal and other fees.

Beyond these costs, TJX said it does not know how much the intrusion will cost, which could include exposure to payment card companies and banks, legal proceedings and other expenses.

The firm expects second-quarter earnings in the range of 29 to 32 cents a share and full-year earnings between $1.80 and $1.85 a share.

This story first appeared in the May 16, 2007 issue of WWD.  Subscribe Today.