Business

Target cuts profit forecast but better recent sales seen; stock rises

Earnings ForecastsCompanies and CorporationsTarget Brands, Inc.Gregg Steinhafel
Target cuts annual profit forecast, earnings tumble in second quarter
Target's earnings report shows it is still struggling to recover from a massive data breach last year

Target Corp. reduced its annual profit outlook Wednesday while reporting second-quarter earnings that plunged from a year earlier.

The earnings report showed the Minneapolis, Minn.-based company is still struggling to recover from a massive data breach last year. Target said the data breach cost it $148 million in the second quarter, which ended Aug. 2. 

The company said it now forecasts annual adjusted earnings to range from $3.10 to $3.30 per share. That’s down from its previous guidance of $3.60 to $3.90.

Target reported a second-quarter profit of $234 million, or 37 cents per share, down from $611 million, or 95 cents, a year earlier. Revenue rose 1.7% to $17.4 billion.

On top of the data breach costs — which Target said were partially offset by $38 million in insurance — the retailer wrestled with weak U.S. sales.  Sales at stores open at least a year were flat in the second quarter.  When new stores were added to the mix, U.S. sales climbed only 0.7%.

However, Target said sales are improving. In July, sales at stores open at least a year rose more than 1%, chief financial officer John Mulligan said.

“Better U.S. sales have continued into August, driven by early back-to-school results,” he said in a news release.

Target shares rose 66 cents, more than 1%, to $59.91 in midday trading.

Since disclosing its data breach in December, Target has struggled to cope with the fallout.  Hackers stole credit and debit card information from tens of millions of customers and sales fell during the holiday season as the retailer worked to regain customer trust.

In May, longtime Chief Executive Gregg Steinhafel resigned. Brian Cornell, an outsider most recently with PepsiCo., took over this month.

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Copyright © 2014, Los Angeles Times

UPDATE

9:12 a.m.: This story has been updated to include an updated stock price and more details about the data breach.

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Earnings ForecastsCompanies and CorporationsTarget Brands, Inc.Gregg Steinhafel
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