Will Target’s problems get worse?


target focus

Target’s first earnings report since its CEO stepped down will be closely watched.

Several well-known retailers will report earnings this week. But the most prominent one literally and figuratively has a bull’s eye on its back: Target.

You can’t blame Target (TGT, Fortune 500) investors for being nervous heading into this earnings report, which is on tap for Wednesday morning. The discount retailer did little to instill confidence by announcing the surprise resignation of former CEO Gregg Steinhafel on May 5.

Target’s shares have dropped about 6% since that move.

Although many investors assumed that Steinhafel’s departure was largely due to the massive data breach that impacted Target customers last December, there are also concerns that the company’s sales and earnings may be disappointing due to a challenging retail environment.

Wal-Mart (WMT, Fortune 500) didn’t help matters last week by reporting weak results and sluggish store traffic, which the company blamed on this past winter’s severe weather.

Related: Wal-Mart is hurting for shoppers

Target is expected to report earnings of 71 cents, down from 82 cents last year. Analysts have trimmed their earnings estimates by almost 20% over the past three months, but are anticipating a slight increase in revenue.

Target CEO falls on his sword 

Investors will be eager to see if the company’s sales and profits are affected by the negative publicity due to the security breach.

There are fears that some customers may have lost confidence in Target and no longer trust the store with their personal data, especially credit and debit card numbers.

Interim CEO John Mulligan has stressed that customers are safe. But Mulligan is not expected to be named as the permanent CEO.

Target CEO: Customers are safe 

Target has also struggled with new stores in Canada. This market appears to be a tough one for some retailers to crack. Another poorly performing retailer, Sears (SHLD, Fortune 500), announced last week that it may sell its investment in Canadian stores.

Sears will report its latest results on Thursday.

Related: Sears burning cash and closing stores

The numbers from Sears, Target and other retailers could set the tone for the market after last week’s choppy trading. Stocks ticked higher on Friday, but finished the week mixed as volatility returned and investors worried about earnings.

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While Nordstrom (JWN, Fortune 500) and J.C Penney (JCP, Fortune 500) posted stronger-than-expected sales last week, the market was concerned by the problems at Wal-Mart as well as disappointing numbers from Kohl’s (KSS, Fortune 500)

Home Depot (HD, Fortune 500)and Lowe’s (LOW, Fortune 500) could give some clues about the health of the housing market. New reports on existing and new home sales for April will be out this week too.

Best Buy, (BBY, Fortune 500) which has been a terrible stock this year after surging in 2013, is also reporting earnings this week. Amazon (AMZN, Fortune 500) remains a tough competitor for Best Buy.

Niche retailers GameStop, (GME, Fortune 500) Dick’s Sporting Goods, (DKS, Fortune 500) Foot Locker, (FL, Fortune 500) Aeropostale (ARO) and others are also due to release results.

Outside of the retail industry, Campbell Soup (CPB, Fortune 500) is scheduled to report earnings on Monday morning, while Hewlett-Packard (HPQ, Fortune 500) is set to reveal its numbers Thursday evening.

And this week’s economic schedule is very light. The Federal Reserve will be back in focus on Wednesday as investors get their hands on the minutes from the central bank’s policy meeting at the end of April. To top of page

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