Target has lowered its second quarter forecast citing the promotional discounts it had to use to attract shoppers. The Minneapolis-based retailer also said on Tuesday it expects gross expenses tied to a massive data breach this past winter to come to $US148 million ($A160 million) in the period, which will be offset by $US38 million in insurance. It also paid $US1 billion to retire $US725 million in debt. Target Corp has been reeling since it announced in December that hackers stole milli
ons of customers’ credit and debit card records.
The theft hurt the chain’s reputation, and profits, and spawned dozens of legal actions.
Target is facing troubles on a number of other fronts as well, including the perceptions that its prices are higher than those at Walmart.
The company’s expansion into Canada, its first foray outside the US, has also been a disappointment, with analysts saying Target botched its expansion by moving too aggressively.
For its second quarter, Target said it expects sales to be flat at established locations in the US, as “guests continue to spend cautiously and focus on value”, and that promotional discounts are expected to hurt profit margins.
Sales are expected to be “somewhat softer” at its stores in Canada as well.
The company now expects to earn about 78 cents per share for the quarter, excluding one time items, down from the 85 cents to $US1 per share it previously forecast.
When factoring in the costs related to the data breach and the debt repayment, reported earnings per share are expected to be about 41 cents lower than that adjusted figure.
AP
