Target Earnings: Profit Dives 62% on Struggles in Canada and the U.S.

A look at the retailer's latest quarterly results.

Aug 20, 2014 at 10:40AM

Target's (NYSE:TGT) struggles aren't over yet. The retailer today posted earnings results for its fiscal second quarter that provided very little for investors to get excited about.

Profit plummeted, diving more than 60% to $0.37 a share from the year-ago quarter's $0.96 haul. Quarterly revenue ticked higher by a slight 2% to reach $17.4 billion. Both those results were about even with analysts' lowered expectations. The stock fell marginally in early trading.


While a 62% profit dip might seem dramatic, keep in mind that it was telegraphed by the company earlier this month, and was powered by a few charges that shouldn't repeat in future quarters. For example, Target took an $0.11 per-share loss tied to the data breach from last year. That event has cost the company $150 million so far, which should represent the worst of the financial hit. Management said in a press release that they believe Target has now expensed the "vast majority of actual and potential" costs to come from the breach.

Operationally, Target is still wrestling with a very competitive retailing environment in the U.S. Customer traffic was down again, and that dip came despite increased promotions that hurt profitability. Target's comparable-store sales growth was flat, putting it in the same company as other struggling retailers like Wal-Mart (NYSE:WMT), which recently booked zero comp growth for its second quarter. And just as Wal-Mart did a week ago, Target lowered its full-year earnings outlook today. The company now expects to earn $3.20 at the midpoint of guidance, down from the prior goal of $3.75 a share and below Wall Street's forecast of $3.49.

New CEO Brian Cornell also has his work cut out for him with regard to Target's Canadian expansion. That division turned in an 11% comparable-store sales drop along with worsening profitability. All told, Canada's 130 locations cleaved $204 million from Target's bottom line this quarter, which was quite a bit higher than the $170 million loss from the prior-year period. 

Still, there were a few hopeful signs that point to the potential for improving results in the months ahead. Yes, customer traffic levels were down last quarter, but the dip wasn't as bad as in the prior quarter. And the company managed to book a small comparable-store sales gain in the month of July, which appears to be holding on in the August back-to-school shopping boost. An uptick in demand, however slight, would buy Cornell and his team some breathing room as they work to get the business back to consistent growth in the U.S., and toward profitability in Canada.

Leaked: Apple's next smart device (warning, it may shock you)
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

Demitrios Kalogeropoulos has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers