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NEW YORK (TheStreet) -- On Tuesday, a mere six days removed from announcing former Pepsi (PEP) - Get Report and Walmart (WMT) - Get Report executive Brian Cornell as its first outside chairman and chief executive officer, Target (TGT) - Get Report issued another earnings warning.

The latest dreary commentary from the Minneapolis-located retailer should frighten its investor base for one huge reason: The business had already been underperforming management's expectations.

Citing $148 million in gross expenses to increase the accrual for estimated probable losses related to the December 2013 data breach, a $285 million pre-tax loss (or 27 cents per share) for a debt retirement and softer than expected U.S. and Canadian sales, Target guided its GAAP second-quarter earnings per share to 41 cents lower than its non-GAAP figures. Target took down its second-quarter non-GAAP earnings per share guidance to 78 cents per share from the 85 cents to $1 per share conveyed on May 21.

According to Yahoo Finance estimates, Wall Street had been looking for second-quarter earnings per share of 91 cents on sales of $14.74 billion.

No negative revisions to the full-year guidance of $3.60 to $3.90 (already reduced by 25 cents per share from a prior plan on the first quarter earnings call) were articulated, but that is likely lurking in the weeds for when the company announces its second-quarter earnings on Aug. 20.

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Ultimately, it's the revised non-GAAP earnings guidance, which captures the very core performance of the business, that should be of worry to Target investors.

Target's operations in both the U.S. and Canada are essentially underwhelming its own cautious view, and the new commentary is highly inconsistent with what was offered from interim chief executive officer John Mulligan and chief merchandising and supply chain officer Kathryn Tesija on May 21. At the time, Target suggested to investors that the U.S. business was beginning to turn the corner from the holiday data breach amid investments in promotions ad marketing, while Canada was on the mend as excess inventory was cleared through aggressive discounts and supply chain hiccups were being corrected.

The latest developments from Target and the stock's 4.4% decline on Tuesday's session hint that the market is still trying to properly value a business that is now consistently underperforming guidance. In light of the lagging nature of Target's fundamentals and the material overhang of a data breach payout, there is reason to believe the company's stock price faces significant risks in the months ahead. First, the share repurchase plan could continue to be halted; second, a dividend payout could be reduced; and third, the company's credit rating could be lowered again.

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On the Earnings Call: Executive Comments from First Quarter 2014

John Mulligan, Interim Chief Executive Officer

Because of the team's efforts, traffic and sales trends have improved substantially and we're in a much better position today than we were just three months ago.

When we survey consumers, we increasingly hear that they have put the breach behind them and they're resuming their Target shopping habits.

We're beginning to see improved guest satisfaction measures regarding in-stocks and price perception. While these early signs of progress indicate that we're moving in the right direction, we're committed to moving faster.

We've updated our full year expectations for profitability in both segments, taking a more cautious view in light of the environment and the additional steps we're taking to grow U.S traffic and sales, accelerate improvement in our Canadian operations and step up the development of our digital capabilities.

We expect to invest more in gross margin for newness, product innovation and promotions in both the U.S. and Canada to enhance our value proposition across both sides of the Expect More, Pay Less brand promise, and incur incremental expenses as we devote more resources to improve operations in Canada and speed up the development of digital and flexible fulfillment capabilities in the U.S.

Kathryn Tesija, Chief Merchandising and Supply Chain Officer

We continue to enhance our operations in the first quarter and our in-stocks have started to show meaningful improvement. At the same time, we ramped up our promotional intensity to show our guests the depth, breadth and pricing of our assortment in frequency categories, and our guests have taken notice. In a recent survey of Canadian guests, we saw double-digit improvements in favorable responses to questions regarding our in-stocks, whether we provide a good value, our everyday pricing and the quality of our deals.

For the second quarter, we've lined up compelling deals, services and products designed to accelerate trips to Target across all of our channels.

In Canada, we're introducing a new format for the Flyer, their version of our weekly circular with a radical, new design based on feedback from our Canadian guests. The new format features a clean design, bolder price points and more products across all categories. We will use a consistent format each week that separates needs from wants, making it clear to our guests that we offer great deals on both. Specifically, we're adding an eight to 12 page wrap filled with frequency items so that the actual flyer has more room for discretionary categories like apparel and accessories, kids, seasonal and home; the categories, Canadian guests most associate with Target.

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At the time of this publication, the author's firm, Belus Capital Advisors, rated Target a sell.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.