Target Profits Drop in Q2

Target Corp. (Minneapolis) lowered its annual profit forecast after reporting a 13 percent drop in second-quarter profit.

The mass merchant said its expansion into Canada — its first foray outside the United States — has proved more challenging than it previously thought.

Its well-known reputation for style and design, which has helped set it apart from U.S. competitors like Walmart, Meijer, Sears and JCPenney, is being interpreted by Canadian shoppers as higher prices.

 “We know there is a gap in guest awareness of how low our prices really are,” said chairman, president and ceo Gregg Steinhafel. “We’re deploying multiple tactics. Our efforts will drive greater awareness.”

Apart from Canada, Target continues to face consumer hesitancy in the U.S. “As we monitor the economy and consumer sentiment, we continue to see a mix of signals in which emerging optimism is balanced with continuing challenges,” said Steinhafel.

Same-store sales increased 1.2 percent, but analysts were expecting a gain of 1.9 percent.