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Target Cites Breach, Canada For Q2 Earnings Slide

In the second quarter, Target Corp. net earnings were $234 million, or 37 cents per diluted share versus $611 million, or 95 cents per diluted share in the year earlier period, the company reported. Comparable store sales were flat in the United States in the second quarter while those in the company’s Canadian operation declined by 11.4%, Target stated.

Adjusted earnings per share came in at 78 cents, down from 98 cents per share in the 2013 quarter, according to Target. The adjusted earnings per share were in line with a Zacks Consensus Estimate of financial analysts.

Adjusted earnings per share compensate for pre-tax expenses related to last year’s data breach of $111 million, or 11 cents per share, pre-tax early debt retirement losses of $285 million, or 27 cents per share, pre-tax impairment losses on undeveloped U.S. land of $16 million, or one cent per share, and a one cent impact related to the reduction of the beneficial interest asset, Target asserted.

Overall second quarter sales were $17.41 billion versus $17.12 billion in the prior-year period.

“While results from the quarter didn’t meet our expectations, we are seeing some early signs of progress as we work to improve results in the U.S. and Canada,” said John Mulligan, Target executive vp and CFO. “In the U.S., traffic trends continue to recover and monthly sales are improving, with July comparable sales up more than 1% Better U.S. sales have continued into August, driven by early back-to-school results. In Canada, the team is making important changes to operations and the merchandise assortment with a focus on delivering improved results by this holiday season.”

Target operates 1,795 in the United States and 130 in Canada as well as an e-commerce web site