NEW YORK (AP) — Target Corp. slashed its annual profit outlook for the second time in three months as the retailer reels from a massive customer-data breach, a botched Canadian expansion and sluggish U.S. sales.
The nation's third-largest retailer also said Wednesday that its second-quarter earnings dropped 61.7 percent. Excluding expenses related to the data breach, earnings per share came in a penny short of Target's reduced estimate, issued earlier this month.
The latest results highlight the challenges that new CEO Brian Cornell, a former PepsiCo executive who officially started at Target Aug. 12, faces on all fronts.
Cornell must wrestle not only with problems specific to Target, such as restoring the discounter's reputation as a cheap chic fashion purveyor. But he also must address broader challenges from the economy and competition in the retail industry.
Target says most of its low- to middle-income shoppers have moved beyond the data breach, but they remain cautious about spending in a tough environment. Target said it had to cut prices more than originally expected in the latest period to get shoppers to buy.
That environment has also tripped up rival Wal-Mart Stores Inc., which lowered its annual profit forecast last week amid sluggish sales.
Target and other retailers also face a rapidly changing business where shoppers, looking for convenience, are moving away from physical stores and researching and buying on their PCs and mobile devices. That has contributed to traffic declines at Target and other retailers.
In his first earnings conference call as Target's new leader, Cornell told investors his top priorities are turning around the U.S. and Canadian businesses, as well as pushing Target to innovate more quickly in digital shopping.
He said he had just returned from a trip to Canada and that he plans to spend time listening to employees. But he also emphasized there's no time to waste.
"I want to be a good student of the business," he said. "But clearly, we have a sense of urgency here and a sense of pace."
Cornell is the first outsider to take the helm at Target. He replaced John Mulligan, the chief financial officer who was interim CEO after Gregg Steinhafel resigned in early May in the wake of the breach that compromised the credit card and personal information of millions of customers and exposed big security flaws.
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