March 5, 2014 / 3:25 PM / 5 years ago

Target announces technology overhaul, CIO departure

(Reuters) - Target Corp announced an overhaul of its information security practices and the resignation of its chief information officer as the retailer tries to reassure customers and investors after a massive data breach late last year.

A Target employee returns carts to the store in Falls Church, Virginia May 14, 2012. REUTERS/Kevin Lamarque

CIO Beth Jacob is the first high-level executive to leave the company following the breach, which led to the theft of about 40 million credit and debit card records and 70 million other records of customer details.

Jacob, who comes from a sales background and has been CIO since 2008, will be replaced by an external hire, Target said in an email to Reuters on Wednesday.

“It’s a decision that should have been made by the CEO on January 1, not through the resignation of an employee that overlooked critical weakness in the operating model,” Belus Capital Advisors CEO Brian Sozzi said.

The breach at Target was the second largest at a U.S. retailer, after the theft of more than 90 million credit cards over about 18 months was uncovered in 2007 at TJX Cos Inc, operator of the T.J. Maxx and Marshalls chains.

Hacking has become a major concern for retailers in the United States. In the latest reported breach, beauty products retailer and distributor Sally Beauty Holdings Inc said on Wednesday its network had been hacked but no card or customer data appeared to have been stolen.

Target Chief Executive Gregg Steinhafel said the company would elevate the role of chief information security officer as part of its plan to tighten its security.

The company will also look externally to fill that position as well as the new position of chief compliance officer.

Steinhafel said Target would be advised by security consultant Promontory Financial Group as it evaluates its technology, structure, processes and talent.

“I believe this is definitely a measure in restoring faith and really showing that they are taking the breach seriously,” Heather Bearfield, who runs the cybersecurity practice for accounting firm Marcum LLP, told Reuters.

Target, the third-largest U.S. retailer, said last week customer traffic had started to improve this year after falling significantly toward the end of the holiday shopping season when news of the cyber attack spooked shoppers.

Target shares were down 1.2 percent at $60.57 in afternoon trading on the New York Stock Exchange.

Additional reporting by Christian Plumb in New York; Editing by Jeffrey Benkoe and Don Sebastian

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