Staples (SPLS) Security Breach Affects 1.16 Million Customers

Shares of Staples Inc. (SPLS) closed down -0.09 or 0.51 percent to $17.55 in Friday's regular trading session. The company disclosed after the close of trading on Friday that as many as 1.16 million payment cards could have been affected by a data breach first detected in October. Staples said that the malware used in the security breach has been eradicated.

Framingham, Massachusetts based Staples Inc. opened its first store in Boston in 1986 and has since grown into a multinational office supply chain store with more than 2,000 stores around the world.
The company operates as Staples Canada in Canada, Officenet-Staples in Argentina, Staples Officecenter in the Netherlands and Mondoffice in Italy. Under its original name, the company operates retail outlets in Austria, Australia, Brazil, China, France, Finland, Germany, India, Norway, Portugal and the UK, as well as in the United States.

Staples issued a statement Friday afternoon updating the data security breach on some of its retail point of sales systems. According to the company, its data security experts had detected that malware had been deployed to 115 of its over 1,400 retail stores in the United States.

The original breach to its point of sale systems occurred in mid-September. Once detected, Staples took immediate steps to eradicate the malware and took additional measures to enhance security. The company also retained outside security experts to look further into the incident and has been working closely with law enforcement and payment companies on the issue.

The investigation revealed that at two of its stores, the malware could have allowed access to data from purchases made between July 20th, 2014 to September 16th, 2014. At 113 of its stores, malware could have accessed data from purchases made from August 10th, 2014 to September 16th, 2014. The transaction data included cardholder names, card numbers, expiration dates and verification codes.

Despite the security breach, experts doubt that the event will have much effect on customer's buying habits. Experts in consumer behavior say that cyber attacks must do significant damage before the public begins to alter their buying habits.

The Staples security hack was minor compared to the cyber attack on Target (TGT) in 2013. The attack affected over 40 million credit and debit cards used at Target for purchases. The attack resulted in Target sales dropping almost four percent in the fourth quarter of 2013.

Another incident, involving Home Depot (HD) earlier this year, had hackers steal data from 56 million credit and debit cards. Nevertheless, Home Depot recovered quickly after the cyberattacks.

The company's statement assured customers saying that, "Staples is offering free identity protection services, including credit monitoring, identity theft insurance, and a free credit report, to customers who used a payment card at any of the affected stores during the relevant time periods.

Staples stock closed a fraction below its yearly high on Friday. The news will probably have an adverse effect on the stock in the coming week. Nevertheless, the stock still pays a substantial dividend and trades at 19 times earnings.

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Published on Dec 22, 2014
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2016. Content published with author's permission.

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