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Still reeling from data breach, Target cuts forecast

This year may go down as Target's (TGT) annus horribilis.

The retailer on Wednesday warned that its earnings per share in 2014 will fall short of an earlier forecast. Target said it expects adjusted per-share earnings to come in between $3.10 to $3.30, well below an earlier target of as much as $3.90 per share.

The discouraging outlook underscores the challenges that remain for the company following a data breach that may have affected as many as 110 million customers. Target said it expects this year to include net pre-tax expenses of $129 million, or 13 cents a share, for dealing with the fallout of the data breach.

Target shares were up 91 cents, or 0.5 percent, to $59.81 in morning trade.

The job of righting the retailer's fortunes will fall to former PepsiCo executive Brian Cornell, who is taking over from ousted chief executive Gregg Steinhafel.

Still, Target reported some bright notes, which might give some encouragement to investors. Customer traffic is rising in its U.S. stores, with same-store sales in July increasing more than 1 percent.

"We are seeing some early signs of progress as we work to improve results in the U.S. and Canada," chief financial officer John Mulligan said in the statement. "Better U.S. sales have continued into August, driven by early back-to-school results."

Mulligan added that the current quarter's results "didn't meet our expectations."

Net income for the second quarter fell to $234 million, or 37 cents a share, from $611 million, or 95 cents. Sales rose 1.7 percent to $17.4 billion.

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Another trouble spot is Target's Canadian operations, where same-store sales slipped 11.4 percent. The company blamed "grand opening sales" held at the stores a year earlier, which generated strong sales in 2013 that were hard to beat this year.

But Target's expansion into Canada may have other issues, with Bloomberg reporting that Canadian shoppers haven't been wowed by its new locations because prices were higher than what could be found at Target's U.S. stores. Some Canadians drive over the border to shop at U.S. Target stores.

In the statement, Cornell said he plans to improve U.S. store traffic and improve the company's Canadian operations.

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