Target slumps as it cuts outlook

Target was under pressure ahead of the open on Wednesday as the retailer cut its outlook for the year.

The company said second-quarter adjusted earnings per share came in at $1.23, up 0.5% from the same period last year, as sales fell 7.2% to $16.2bn. It said the drop in revenue reflects a 1.1% decrease in comparable sales and the removal of pharmacy and clinic revenue from this year’s results.

Based on the current “difficult” retail environment, Target felt it was "prudent" to lower its expectations for comparable sales in the second half of the year.

The company now expects comparable sales in the third and fourth quarter to be flat to 2% lower versus a previous estimate of 1.5% to 2.5% growth.

In addition, it now expects to report adjusted earnings per share of $4.80 to $5.20 versus previous guidance of $5.20 to $5.40.

Chairman and chief executive officer Brian Cornell said: “While we recognise there are opportunities in the business, and are addressing the challenges we are facing in a difficult retail environment, we are pleased that our team delivered second quarter profitability above our expectations.

“Looking ahead, we remain focused on our enterprise priorities as we continue to see the benefits of investing in Signature Categories, store experience, new flex-format stores and digital capabilities. Although we are planning for a challenging environment in the back half of the year, we believe we have the right strategy to restore traffic and sales growth over time.”

Target shares were down 4% to $75.48 in pre-market trade.