Target reported a big earnings drop Wednesday, as it continues to struggle with the lingering effects of a massive theft of customer payment card and other data last year, big losses in Canada and anxious tight-fisted consumers in the United States.
The company's second quarter earnings dropped about 60 percent to $234 million. That wasn't a big surprise as the company had given Wall Street a heads-up that earnings would be disappointing.
Its stock price rose about 2 percent to $60.41, but remains about 12 percent below the peak price of last year.
New CEO Brian Cornell vowed to tackle Target's troubles.
"While I want to study the business and certainly listen and learn from our team, no one is happy with our current performance," he said.
The retailer took about a $110 million hit for expenses related to the data breach. Although Target officials insist that most shoppers have put worries about the theft behind them, they warned they cannot estimate what the eventual cost of the crime may be. Lawsuits from aggrieved consumers and businesses aren't slated to go to trial until 2016.
Meanwhile, Target's losses in Canada — now well north of $1 billion — continued to mount. Sales at Canadian stores open at least 13 months fell 11 percent.
The company's sales in the United States were essentially flat, as consumers kept a tight hold on their wallets.
Cornell noted that Target has some fixes in the works. But he said it will be a while before there's any grand plan to re-energize the company.
"We've got plans in place in the short term to improve traffic, to improve our performance in Canada," he said. "And you can expect me to dive in very quickly to understand the business, to look for the opportunities and to work with the leadership team to develop very focused priorities as we go forward into 2015 and beyond."
Cornell, 55, came to Target from PepsiCo, where he oversaw the company's global food business.
He also had a stint with Target's arch rival, Wal-Mart, heading the Sam's Club warehouse stores for three years. Cornell also served as CEO for Michaels, the craft store chain, and was the chief marketing officer for Safeway.
Morningstar retail analyst Ken Perkins said there weren't any surprises in the earnings report. He said it will likely take several months before any big strategy shift takes shape.
"Not a lot near-term to be encouraged about, although the new CEO hasn't really left his stamp on the vision yet," Perkins said. "Once he has a chance to outline that and really look at what issues can drive the business forward, you may have reason to believe that the future will improve. Right now there's a lot of uncertainty as to when things are really going to turn around."
Target also lowered its earnings forecast for the year by about 15 percent.
Edward Jones retail analyst Brian Yarbrough said it's common for new leaders to reduce expectations. That can make it easier to exceed expectations down the road.
Yarbrough said Target's report was a mixed bag.
"They're definitely making some headway," he said. "But it's still slow and Canada continues to be pretty much a disaster."
Target opened across Canada last year with much fanfare. But the retailer failed to keep stores well-stocked and provide Canadians with many of the products they want. The company plans to add more than 30,000 new items to stores north of the border.
The company reported that the share of its sales going on Target-branded debit and credit cards rose to nearly 21 percent, up slightly from the same quarter a year ago. Customers receive discounts of 5 and sometimes 10 percent when they use the cards at Target.
Sales through the retailer's website and mobile applications rose nearly 30 percent, compared with the same quarter a year ago.
Target officials have said that online sales account for between 2 and 3 percent of total sales. That includes goods ordered online but picked up at stores.
But by this fall, the company expects to be able to ship online orders within one to two days to 91 percent of the U.S. population.