Minneapolis -- Target Corp. reported that its second quarter profit dropped 13% to $611 million in the quarter ended Aug. 3, down from $704 million a year earlier, amid start-up costs related to its entry into Canada. Total company profits, excluding start-up costs related to Canada, increased 6.1%. Similar to other retailers, the chain issued a muted annual profit forecast as it deals with a still uncertain economy and cautious consumers.
“For the balance of this year, our U.S. outlook envisions continued cautious spending by consumers in the face of ongoing household budget pressures,” said Target CEO, president and chairman Gregg Steinhafel. “In Canada, where we are only five months into our market launch, we continue to learn, adjust and refine operations in our existing stores as we prepare to open another 56 stores by year-end.”
Target opened its first Canadian stores in March, so sales from the locations were excluded from the key same-store sales figures. The company said $275 million in revenue came from Canada.
Total revenue reached $17.12 billion, up 2.4% from $16.45 billion in the quarter. Same-store sales were up 1.2%, below the 1.9% analysts had expected.
For the full year, Target now expects earnings per share to be at the low end of its previous guidance of $4.70 to $4.90. In May, the company trimmed its projections from the original outlook of $4.85 per share to $5.05, citing cautious shoppers.