Home Depot earns unwanted distinction

Investors don’t seem to care that Home Depot’s data breach is being characterized as the largest ever in the retail sector with shares of the company hitting a new high on Friday.



Home Depot shares touched a 52-week high of $93.75 on Friday a day after the company disclosed details about an extensive data breach which went undetected for months and compromised the information of 56 million customers.



The company confirmed that the malware used in its recent breach has been eliminated from its U.S. and Canadian networks and provided new details about the completion of a major payment security project designed to increase data security. The project provides enhanced encryption of payment data at the point of sale in the company's U.S. stores, offering significant new protection for customers, the company said. Roll-out of enhanced encryption to Canadian stores will be complete by early 2015. Canadian stores are already enabled with EMV or "Chip and PIN" technology.



The company said its IT security team had worked around the clock since an investigation into the breach began on September 2. Among the troubling findings disclosed was the belief that the malware had been in place since April and that criminals used unique, custom-built malware to evade detection. The malware had not been seen previously in other attacks, according to Home Depot's security partners.



"We apologize to our customers for the inconvenience and anxiety this has caused, and want to reassure them that they will not be liable for fraudulent charges," said Frank Blake , chairman and CEO. "From the time this investigation began, our guiding principle has been to put our customers first, and we will continue to do so."



The company's new payment security protection locks down payment data through enhanced encryption, which takes raw payment card information and scrambles it to make it unreadable and virtually useless to hackers, according to the company. Home Depot said its new encryption technology, provided by Voltage Security has been tested and validated by two independent IT security firms.



Despite the expense of the IT investigation and remediation efforts, the strength of Home Depot’s business during the period when hackers were stealing customers’ data enabled it to increase its full year profit forecast by two cents to $4.54. While the updated guidance includes various expenses already incurred, it does not reflect potentially substantial accruals for future losses the company said are probable but cannot be quantified at this time.