Why Data Breach at Staples May Not Matter

Retail

Published: October 21, 2014 1:20 pm

Last Updated: April 28, 2020 10:16 am

Source: Wikimedia Commons

Office supply store Staples Inc. (NASDAQ: SPLS) confirmed on Monday that it is investigating a breach of payment card data at some of its locations in the northeast United States. The company has said little else except that it takes protecting customer data “very seriously” and reminds customers that they are not responsible for any fraud on their credit cards if the fraudulent activity is reported quickly.

The news had at most a minor impact on Staples’s stock Tuesday. Shares opened about down about 1.3% but clawed back to around flat for the day in afternoon trading. That’s not always the case when a retailer reports a data breach, but there are a couple of mitigating circumstances here.

First, the company’s stock was upgraded early in September from Neutral to Outperform at Credit Suisse based on a possible merger between Staples and Office Depot Inc. (NYSE: ODP). We had our doubts about such a merger at the time, and Staples’s stock price has actually dropped back from a high around $12.75 at the time the upgrade was made to around $12.30 today.

Also, Staples has not provided any detail on the number of records that were breached, but the thefts appear to have been limited to a relatively few of the company’s more than 1,500 U.S. stores. According to the Krebs on Security blog, at least seven stores in Pennsylvania, three in New York City and one in New Jersey were affected.

Finally, there have been so many of these hacking cases recently that there’s a sort of ho-hum reaction. Home Depot Inc. (NYSE: HD) was nicked for 56 million records, and while the Staples breach is not anywhere near that yet, the response from the retailers has been to offer customers free credit protection for some period, and that seems to keep the customers satisfied and coming back to the stores to buy more. There is no reason to think at this point that the Staples experience will be significantly different.

Shortly after the noon hour on Tuesday, Staples’s shares were trading up about 0.1%, at $12.32 in a 52-week range of $10.70 to $16.67.

ALSO READ: Kmart Stores Hit by Hacking Attack

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