Target lowers forecast, expects 'somewhat softer' Canadian sales

Target is lowering its profit forecast, citing costs related to ahuge data breach late last yearandwhat it calls a "challenging" retail environment.

U.S. sales are expected to be "essentially flat," the company said in a statement, while Canadian sales are forecast to be "somewhat softerthan expected."

Target's foray into Canadahasbeen a major disappointment for the Minneapolis-based company, with losses last year of almost $1 billion US. Analysts said it expanded too aggressively.

• Target Canada's failed launch offers lessons for other retailers

• Target profit drops 16% as Canadian operations slump

• Brian Cornell named new Target CEO

"While the environment in both the U.S. and Canada continues to be challenging, and results arent yet where they need to be, we are making progress in our efforts to drive U.S. traffic and sales, improve our Canadian operations and advance Targets digital transformation,"said interim CEO JohnMulligan in a statement.

As part of that turnaround strategy, Target last week appointed former PepsiCoexecutive Brian Cornell as its new CEO. He takes over next week.

Targetsaysit now expects second-quarter adjusted earnings of 78 cents US per share, down from its previous guidance of 85 cents.

The retailer said its second-quarter results will includehigher data breach-related expenses of $148 million US, partially offset by $38 million in insurance.

Target announced last December that hackers had stolen millions of credit card and debit card customer records.It initially said 40 million accounts had been accessed. A month later, it upped that figure to 70 million.

Target shares dropped more than 4.4 per cent to close at $58.02US in NYSE trading Tuesday.