Target Cuts Q2 Outlook, Estimates Data Breach Costs At $148 Mln.

(RTTNews) - Target Corp. (TGT), the second biggest discount-store operator in US, Tuesday lowered its adjusted earnings forecast for the second quarter, reflecting aggressive promotional markdowns in US and soft sales in Canada.

The Minneapolis, Minnesota-based retailer expects second-quarter adjusted earnings to be within a range around $0.78 per share, compared to prior outlook of $0.85 to $1.00 per share. On average, 25 analysts polled by Thomson Reuters expect earnings of $0.91 per share for the quarter. Analysts' estimates typically exclude special items.

The revision reflects "essentially flat" comparable sales and lower margins in the US segment, driven by promotional markdowns as customers continue to spend cautiously. The Canadian segment was hurt by softer-than-expected sales as well as investments to clear excess inventory.

"While the environment in both the U.S. and Canada continues to be challenging, and results aren't yet where they need to be, we are making progress in our efforts to drive U.S. traffic and sales, improve our Canadian operations and advance Target's digital transformation," said John Mulligan, Interim President and CEO, CFO of Target.

Target now expects second-quarter reported earnings to be about $0.41 lower than adjusted earnings per share.

The reported earnings results included a gross expenses of $148 million tied to the massive data breach that compromised personal data of millions of customers in the last holiday shopping season. The expenses will be partially offset by a $38 million in insurance receivable.

The company last week appointed PepsiCo Inc. (PEP) executive Brian Cornell as CEO to replace Gregg Steinhafel, effective August 12. Steinhafel was fired this May as the result of the data breach.

Target intends to report its second-quarter results on August 20.

TGT is currently trading at $58.83, down $1.87 or 3.09%, on the NYSE.