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Target's Big Miss: What Wall Street Thinks

Stocks in this article: TGT

This story has been updated from 10:01 am ET to include comments from the company's conference call as well as additional analysts' comments.

NEW YORK (TheStreet) - Wall Street is digesting Target's (TGT) first-quarter earnings after the discount retailer missed analysts' expectations and guided lower for the fiscal second quarter and full year amid the ongoing effects of a massive security breach in December, poor results from its Canadian operations as well as the general malaise fueled by the rough winter weather experienced by many retailers during the quarter.

Target reported net earnings of $418 million, or 66 cents a share, for the May 3 ending quarter, down 16% from $498 million, or 77 cents a share in the year-earlier quarter. Adjusted earnings of 70 cents a share fell 13.9% from 82 cents a share in the year-earlier quarter, the company said. Target had provided adjusted first-quarter earnings guidance of 60 cents to 75 cents a share in February.

Analysts, according to Thomson Reuters, had expected the company to post quarterly earnings of 72 cents a share. Revenue rose 2.1% to $17.05 billion.

Target's comparable store sales came in better than expected, but still declined in the quarter by 0.3%. Analysts, on average, had predicted comps to fall 1% in the three-month period.

"First quarter financial performance in both our U.S. and Canadian Segments was in line with expectations, reflecting the benefit of continued recovery from the data breach and early signs of improvement in our Canada operations," said John Mulligan, Target's interim President and CEO and CFO. "While we are pleased with this momentum, we need to move more quickly. 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."

Shares were rising 0.61% to $56.96 on Wednesday.

The Minneapolis-based company is facing scrutiny following a massive security data breach during the all-important holiday season. Wall Street is also criticizing the company's struggling operations in Canada, which is unprofitable as of the second quarter.

Target is in the midst of management changes as result of the fallout of the data breach as well as efforts to improve U.S. traffic and sales and improve its Canadian operations. Earlier this month CEO Gregg Steinhafel resigned. CFO John Mulligan has stepped in as interim chief executive. The company had announced more middle management changes on Tuesday, namely that Tony Fisher, president of Target Canada has left the company. Fisher is replaced by Mark Schindele, Target's senior vice president of merchandising operations. Target also said that it was naming a non-executive chair in Canada "to ensure all strategies and tactics align with the Canadian marketplace," according to a Tuesday press release.

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