NEW YORK (AP) — Target cut its annual profit outlook Wednesday and said its first-quarter earnings fell 16 percent as it took another hit from a massive customer data breach and a troubled expansion in Canada.
The third-largest U.S. retailer, based in Minneapolis, also issued a second-quarter profit projection below analysts’ expectations.
Target also said it doesn’t expect its six straight quarters of traffic declines to reverse this year in what analysts say is the most tumultuous time in its history.
Still, there are some encouraging signs. A key revenue metric improved after tumbling shortly after the data breach, which compromised the credit card and personal information of millions of customers and exposed big security flaws.
But Target accomplished that by stepping up discounts, such as offering five 12-packs of Coke products for $10, its lowest price in more than a decade. Such heavy discounting squeezed profit margins in the quarter.
The news comes a day after the retailer fired the president of its troubled Canadian operation and two weeks after the abrupt departure of Target CEO Gregg Steinhafel.
Chief Financial Officer John Mulligan took over as acting CEO while Target searches for a new permanent leader.
In the meantime, Mulligan outlined three priorities: revitalizing Target’s U.S. business by constantly testing new products; becoming a digital leader to cater to shoppers jumping back and forth from online to physical stores; and improving operations in Canada.
“We need to listen to all of them (shoppers), how they’re feeling, what they want and how well we’re serving them,” Mulligan told investors Wednesday.
Still, whoever takes over the permanent reins of Target will have to contend with not only Target’s specific issues but also broader challenges affecting the retail industry.