Minneapolis -- Target Corp. posted a 16% drop in first quarter earnings as costs related to its data breach and the company's troubled Canadian operations continue to take a toll on its overall performance. The retailer also cut its annual profit forecast and released a second quarter projection below Street expectations. On a positive note, Target's same-store sales metric improved from the last quarter.
Target earned $418 million in the quarter ended May 3, down from $498 million in the year-ago period. Revenue rose 2.1% to $17.1 billion. Target's Canadian operations had sales of $393 million, up from $86 million last year.
Same-store sales edged down 0.3%, better then the 2.4% drop in the chain's fourth quarter.
Target said it incurred $26 million in costs related to the breach. Approximately $8 million of those costs were covered by insurance.
“While we are pleased with this momentum, we need to move more quickly,” said Target president and interim CEO John mulligan. “As a result, we have made changes to our management team and are investing additional resources to drive U.S. traffic and sales, improve our Canadian operations and advance our ongoing digital transformation. We have updated our 2014 earnings expectations to reflect the impact of these investments and believe that they position Target for accelerated profitable growth as a leading omnichannel retailer.”
On Tuesday, Target made changes to its management team and replaced the head of its Canadian operations.