Target sees a ''challenging environment'' in the second half and cut its earnings forecast. Slow traffic slammed sales in the latest quarter. Fred Katayama reports.
Results from Target's turnaround drive came to a halt in the latest quarter. Slow consumer traffic slammed existing store sales, which fell more than expected. Revenue dropped 7 percent and profit by even more. The discount retailer lowered its forecasts for comparable store sales and profit for the full year. CEO Brian Cornell, who has been trying to turn around the company the past two years, said Target is planning for what he called a "challenging environment" in the second half of the year. Cowen senior analyst Oliver Chen said, "Target's guidance reset is better aligned with Street expectations." Target experienced weakness in electronics sales, partly because of a sharp sales drop in Apple products. Food deflation hurt its grocery business. And digital sales growth slowed down. Among the few bright spots: the key categories that Cornell is focusing on - babies, kids and wellness goods - did well. Retailers like Target have been hurt as shoppers flock to online rivals like Amazon.com and spend money on home renovations at the likes of Home Depot instead of on apparel. Target shares fell sharply in early trading, wiping out its nearly 4 percent gain this year.