Sections

Weather Forecast

Close
Advertisement

Target cuts profit estimate as data breach costs rise

Email Sign up for Breaking News Alerts
business Fargo, 58102
Fargo ND 101 5th Street North 58102
Target Corp cut its second-quarter earnings estimate due to a significant rise in costs related to a data breach last year and higher promotions and discounts to lure customers in North America.
Advertisement
Advertisement

The third-largest U.S. retailer also warned of weak sales in the United States and Canada, sending its shares down 3.7 percent to $58.48 in early trading on Tuesday.

The company has been struggling to move past a devastating data breach during the 2013 holiday season, in which hackers stole at least 40 million payment card numbers and 70 million other data.

The bleak forecast comes less than a week after Target named former PepsiCo Inc and Wal-Mart Stores Inc executive Brian Cornell as its chief executive as it tries to regain customer confidence.

Target on Tuesday said it incurred $111 million in net pre-tax expenses in the second quarter ended July with respect to the breach. That was much higher than the $26 million incurred till the first quarter.

U.S. same-store sales were flat in the second quarter, as customers continued to pull back spending, the company said in a statement.

Target also said sales were weak in Canada. The company lost nearly $1 billion last year in the country due to a botched expansion plan.

The company also said it incurred $285 million in pre-tax losses in the quarter, due to an early retirement of $725 million of its long-term debt.

Target estimated adjusted earnings of about 78 cents per share for the second quarter, lower than its prior forecast of 85 cents to $1.00 per share.

Analysts on average were expecting a profit of 91 cents per share, according to Thomson Reuters I/B/E/S.

Up to Monday's close of $60.70, Target shares had fallen 15.7 percent in the past year.

  
Advertisement
Advertisement
Advertisement