brand new CEO Brian Cornell has a lot of work ahead of him.
The discount retailer slashed its full year profit forecast on Wednesday after reporting another quarter of anemic U.S. sales and disastrous results in Canada, where it opened its first international stores last year.
Target is looking to move on from a massive data breach that kept shoppers away during the crucial holiday season last year and ultimately cost Cornell’s predecessor, long-time Target veteran Gregg Steinhafel, his job. The breach coincided with a botched entry into Canada, where the company failed to dazzled shoppers and was beleaguered by empty shelves and prices on items that were often higher than at Wal-Mart Stores
While Target, the third-largest U.S. retailer, has taken many steps to fix its many problems, including naming a new head for Canada and creating an expert committee to help it catch up to rivals in e-commerce, the results aren’t showing yet.
U.S. comparable sales were flat in the quarter ended August 6, while Canadian sales by that metric fell 11.4%. Its second-quarter adjusted profit was $0.78 per share, a decrease of 20.6% from $0.98 per share a year earlier. Total sales rose 1.7% to $17.4 billion.
Earlier this month, Target put a $148 million price tag on the breach. But on Wednesday, the company slashed its full year profit forecast and now expects to a full-year 2014 adjusted profit of $3.10 to $3.30 per share, down from a prior forecast for $3.60 to $3.90 a share.
Target recently announced steps to fix its Canadian business, which includes 130 stores, but last quarter, it lost $204 million, bringing its total losses in that market to $1.4 billion in just a year and a half.
Still, in the U.S., there are signs of improvement. Comparable sales were up in July, back-to-school sales in August are doing well, and traffic declines are abating, chief financial officer John Mulligan said. And online sales, though but a fraction of Target’s sales, rose 30%.
“While results from the quarter didn’t meet our expectations, we are seeing some early signs of progress as we work to improve results in the U.S. and Canada,” Mulligan said in a statement. Cornell, a former PepsiCo executive, was named CEO in July.
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