Target (NYSE: TGT) is still struggling to rebound from last year's data breach and a failed Canadian expansion. The retailer posted first-quarter profit today that missed analysts' estimates as traffic to Target's stores declined for the sixth straight quarter.
Net income fell 16 percent to $418 million from $498 million a year earlier as the retailer upped promotions and discounts to win back shoppers after the data breach. Revenue increased 2.1 percent to $17.05 billion. The number of transactions declined 2.3 percent, but average transaction amounts increased 2.1 percent, reflecting the sale of higher-priced items, like electronics.
In Canada, Target's earned sales were $393 million with an operating loss of $211 million for the latest period. That figure brings the total losses in Canada to approximately $1.6 billion, following the opening of the first Target stores there last year.
Target is trying to regain footing as it searches for a new CEO, revamps the Canadian division and copes with the theft of 40 million payment-card numbers by hackers. Target has incurred $18 million worth of expenses related to the data breach and admitted that it cannot estimate how much cleaning up the data breach will ultimately cost. Future expenses could include payments to claims for counterfeit fraud losses, litigation and various consulting fees.
"These costs may have a material adverse effect on Target's results of operations in second quarter and full-year 2014 and future periods," the company wrote in its earnings release.
Looking ahead, Target will move forward under the leadership of John Mulligan, now interim CEO after the board ousted Gregg Steinhafel, following a seven year tenure as CEO and 35 years with the retailer. Target recently named Mark Schindele as the new top executive overseeing Canadian operations.
-See this Target earnings statement
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