Canadian expansion hurt earnings at Minneapolis-based Target Corp. (NYSE:TGT), which reported second-quarter financial results August 21.
The big-box giant reported a 13% drop in second-quarter profit in part because its expansion into Canada has proved more challenging than first expected.
The company's Canadian arm hurt earnings by US$0.21 per share in the quarter that ended August 3 and Target now expects that Canadian operations will be a US$0.82 drain on profit-per-share this year. In May, Target estimated that its Canadian arm would only be a US$0.42 drain on profit-per-share this year.
Overall, the company generated US$611 million profit on $17.1 billion in sales during the quarter.
The company opened its first Canadian stores in March and had 68 stores at the end of its second quarter.
The first nine B.C. stores opened May 7 with a 10th B.C. store opening later that month.
Target still plans to have a total of 124 Canadian stores by the end of 2013.
Part of Target's struggle in Canada may be because of customer complaints about service.
Forum Research Inc. released a poll August 15 that revealed that Target's customer satisfaction rating was the worst among eight department-store chains, and that the store's satisfaction levels are dropping.
Target is the second big-box retailer based in Minneapolis in the past two days to report earnings that were hurt by weak Canadian operations.
Burnaby-based Best Buy Canada's parent Best Buy Co. Inc. (NYSE:BBY) yesterday reported that "ongoing competitive pressure in Canada" was part of the reason why its international division suffered a comparable store sales dip, which was three times the rate chain-wide.
