Target (NYSE:TGT) reported a 62 percent drop in profits for the second quarter as a result of price cutting. In an effort to help cash-strapped consumers and to win back shopper confidence after last year's data breach, the new prices left the big box retailer cutting the annual earnings forecast, reported Reuters.
The adjusted profit forecast went from between $3.60 and $3.90 a share to $3.10 and $3.30 a share. Target had already adjusted its earnings statement for the second quarter earlier this month when it claimed lack of consumer spending had weakened sales.
Target also took into consideration the data breach last holiday season, which resulted in the theft of at least 40 million payment card numbers and 70 million other pieces of consumer data. The total loss for the company was $148 million in gross expense, thus far.
Target has also felt the crunch this year from struggling sales in Canada. Some say the retailer opened too many stores too quickly and faced management and price backlash from Canadian customers. Earlier this month, the retailer pledged to improve customer service, after a review of Canadian operations and offered an apology to shoppers for mismanagement.
"Target continues to struggle with retailing basics—right product, right time, right place—in both its U.S. and Canadian divisions," said Kelly Tackett, U.S. research director at Planet Retail. "After months of radio silence, management finally provided a roadmap for the Canadian turnaround, but we still lack a definitive plan to address the U.S. In its home market, improving store-level execution and delivering newness and excitement in marketing and merchandising must be top of the to-do list for new CEO Brian Cornell."
Earlier this month Brian Cornell was made the new chairman and CEO of Target. He hopes to advance the company's team building and omnichannel presence, and bring sales out of a seven-quarter slump.
For the second quarter, the company reported that net profits fell from $611 million the year prior to $234 million. Total sales rose 1.7 percent to $17.4 billion, but comparable sales were flat.
-See this Reuters article
-See this Target earnings release
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