• Q2 net profit falls 13.2% to US$611m
  • US sales up 2.4% to $16.8m
  • Comparable store sales edge up 1.2%

Retail giant Target Corporation suffered a double-digit profit dip in the second quarter, thanks to softer than expected sales in the US and start-up costs in Canada.

US sales rose by only 2.4%, with a 1.2% increase in comparable store sales, while gross margin edged up slightly – 31.4% versus 31.3% in the second quarter last year.

Meanwhile, Target’s new Canadian business, which now has 68 stores, registered sales of $275m and a gross margin rate of 31.6%, losing $169m in EBIT terms on start-up costs and operating expenses.

Target chairman, president and CEO Gregg Steinhafel said the company’s results had benefited from “disciplined execution” of its corporate strategy and good expense control.

“For the balance of this year, our US outlook envisions continued cautious spending by consumers in the face of ongoing household budget pressures,” Steinhafel added.

“In Canada, where we are only five months into our market launch, we continue to learn, adjust and refine operations in our existing stores as we prepare to open another 56 stores by year end.”

Target now expects its full-year adjusted earnings per share to be at the lower end of its previous forecast of $4.70-4.90.