Target’s new CEO Brian Cornell has his work cut out for him amid sagging profits some 62% lower than a year ago in the recent quarter and weaker earnings forecasts for the balance of the year.
The Minneapolis-based retailer said reverberations from the security breach, in which hackers made off with credit and debit card data from customers, cost it $146 million through its second fiscal quarter, which ended Aug. 2. Those costs are net after the $90 million in insurance payments. The company also said that it believed most of the costs related to the breach were behind it.
Target reported net income of $234 million, or 37 cents a share, compared with $611 million, or 95 cents a share, a year earlier. Without the added breach charges and losses from early debt retirement reported in the quarter, Target’s 78-cent results were inline with analysts’ estimates.
Cornell said Target needed "a sense of urgency.”
“No one is happy with our current performance," he said during Wednesday’s earnings call with analysts.
Target slashed its full year earnings guidance to a range of $3.10 to $3.30 per share. Earnings guidance given a year ago for this fiscal year was $5.50. Some analysts believe more cuts will occur given the company would need to improve its performance by 70% in the second half of the year to meet the newest guidance forecast.
Analysts also are concerned that Target will need to issue more debt in the near term amid dismal results in Canada and languishing recovery in its U.S. business. Target announced this week extended hours to midnight in many cities across the nation from now through the holidays.
Wall Street expects to see more promotions by Target, which nibbles away at thinning margins. The retailer’s grocery expansion has not resulted into more store traffic as originally thought.