After the attack became public in December, Target's reputation and sales took a hit. The company's U.S. comparable-store sales decreased 2.5 percent in the fourth quarter. Target is slated to report its latest quarterly results later this month. With more than 1,900 stores in North America, the company is the U.S. second-largest discount retailer, behind Wal-Mart Stores Inc.

Stock decline

Target shares fell 2.8 percent to $60.31 as of 9:55 a.m. in New York. Before today, the stock had declined 12 percent in the past 12 months.

In March, Target told a Senate panel that it had clues about the attack weeks before responding and was exploring why it took so long to react. Sometime after intruders entered Target's systems on Nov. 12, their activities were detected and evaluated by security professionals, according to remarks Mulligan submitted to the panel. The company was later alerted to suspicious activity by the U.S. Justice Department, leading to an internal investigation that confirmed a breach on Dec. 15.

'Hard questions'

"We are asking hard questions about whether we could have taken different actions before the breach was discovered that would've resulted in different outcomes," Mulligan said at the time. "In particular, we are focused on what information we had that could have alerted us to the breach earlier; whether we had the right personnel in the right positions; and ensuring that decisions related to operational and security matters were sound."

Several senators criticized Target's management for not reacting sooner to warnings from sophisticated anti-hacking systems. The Senate Committee on Commerce, Science and Transportation, which prepared a report ahead of the hearing, found that Target appeared to have missed opportunities "to stop the attackers and prevent the massive data breach."

The board said today that Steinhafel held himself personally accountable for the breach and "pledged that Target would emerge a better company." Steinhafel, who had been CEO since 2008, will remain an adviser to the company during the transition.

Northern expansion

Target's push in Canada also has been a challenge for the retailer. Canadians, who for years had shopped at Target stores just over the border in the U.S., have been disappointed that prices in Canada are higher. Local competitors also cut their prices to make Target's entry more difficult. The operation lost $941 million before interest and taxes in 2013, reducing the year's profit by $1.13 a share.

"They need some new leadership in there," said Brian Yarbrough, an analyst at Edward Jones in St. Louis. "The U.S. has been struggling, the Canadian expansion has been a disaster, and then you throw in the data breach."

Steinhafel is entitled to severance payments, Target said in a separate filing today. The maximum payment for executives who involuntarily leave the company is two times base salary and the average of the last three years of short-term incentive and personal performance payments, a previous filing shows.

The company also has hired the recruitment firm Korn Ferry to advise the board. Target will probably seek candidates with a retail background, Feldman said. He sees HSN Inc. CEO Mindy Grossman, Victoria's Secret CEO Sharen Turney and Bon-Ton Stores Inc. CEO Brendan Hoffman as possibilities.

Target isn't the only retailer to have had its systems attacked in the past year. Luxury department-store chain Neiman Marcus Group Ltd. said in January that about 1.1 million credit cards may have been compromised in a data breach. Days later, arts-and-crafts retailer Michaels Stores Inc. said some customer payment-card data may have been used fraudulently.

Copyright 2018 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.