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Continued: Schafer: Target turns its focus back to business

  • Article by: LEE SCHAFER , Star Tribune
  • Last update: February 27, 2014 - 9:56 AM

The company is going to lose a lot of money in Canada again this year. There has been a sizable bump in inventory, never a good thing for a retailer because that’s always followed by clearance sales. And executives said the company was more cautious about earnings per share for the year than analysts had previously projected.

None of this could have surprised the analysts. Of the 25 now reporting data through Thomson Reuters, only eight this week reported having a positive opinion on the stock, while four have the exceedingly rare recommendation to investors that they sell or that Target’s stock will underperform the broader market.

One word you could see Wednesday in their research reports about Target’s fourth quarter was “stabilized,” and that management has done a good job containing the damage from the data breach.

Another popular word in research reports is “structural,” as in “structural issues.” If anything, that should be even more worrisome than any data breach. Structural doesn’t mean the kind of problem that results from a weakening economy or some poorly chosen new store locations.

It means that management has to figure out how it intends to respond amid fundamental changes in its market. After killing themselves to contain the data breach, Target’s executives still face the same daunting challenges they had the week before it happened.

lee.schafer@startribune.com • 612-673-4302

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  • Target executives managed to steer investor focus away from the data breach on onto operational issues Wednesday.

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