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) - Get Report 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.

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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.

"One of our key priorities is improving performance in Canada more rapidly and we believe it is important to be aggressive. We have a committed team who is focused on delivering an outstanding shopping experience to our Canadian guests and getting our performance on track," Mulligan said in the Tuesday release.

Target forecasted adjusted earnings for the second quarter of 85 cents to $1 a share. Consensus expectations were pegging second-quarter earnings at $1.02 a share. Target expects full-year adjusted earnings of $3.60 to $3.90 versus consensus of $3.98 a share, according to Thomson Reuters.

During the conference call, Target forecasted comparable sales that were flat to "slightly positive" for the second quarter and EBITDA that was below last year, but with a smaller year over year decline than in the first quarter, Mulligan said, adding that as the company looks to make strategic investments to right its ship, gross margin as well as SG&A expenses will be pressured.

Further, for the first time, Target will be reporting comparable sales in Canada during the second quarter, which Mulligan cautions will be "highly volatile." The company is expected a "single digit decline" in Canadian same store sales for the second quarter.

Mulligan said Target is taking a more "cautious view in light of the environment and the additional steps were taking."

"Our focus is on driving the business forward," he said. Target is focusing on three strategic areas - driving sales and traffic in the U.S., operational improvement in Canada and accelerating the company's plans to become a "leading omnichannel" retailer in the U.S.

Here's what analysts were saying about Target:

Brian Sozzi, Belus Capital Advisors (Sell; $55 PT)

[The] number one issue at Target that not many are discussing: the continued downward trajectory in the number of visits to the stores (which began pre data breach) ... Whether this trend is the result of online/mobile influence, demographic shifts (to urban areas), the economic recovery being faux, or a continued evolution in how consumers view non-essential purchases the fact is that weak store visits suggest newly incoming/promoted Target executives must consider further scaling down the U.S. store base. This would be in addition to committing material amounts of capital to reinventing the interior of the stores, creating Target 2020 if you will, to compete with reawakened rivals boasting vendor support.

Christopher Horvers, JPMorgan Chase (Neutral)

Broadly, the results reflect our view that merchandise margins need to come down given encroachment risk in apparel and home (two of the fastest penetrating category online) and the fact that TGT has over-earned on merchandise margins given thin inventory, challenging traffic levels, and the need to re-embrace "Tarjay" vs. stepping closer to WMT. This, plus stepped up capex and spending and a lowering of the bar, is what investors potentially face with a new CEO.

Mark Miller, William Blair (Underperform)

We are reducing our 2014 EPS estimate to $3.60 (from $3.75) and our 2015 EPS estimate to $4.05 (from $4.20), which are well below current consensus projections of $3.99 and $4.70. It remains unclear when the pattern of negative earnings revisions will cease, and we see significant risk to consensus forecasts for next year. From a longer-term standpoint, secular challenges related to competition in the United States and the uncertainty related to ultimate profit contribution (and perhaps viability) of the Canada business remain worrisome, in our view.

--Written by Laurie Kulikowski in New York.

Follow @LKulikowski

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