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Fallout from last year's data breach continues to plague Target (TGT), causing it to cut its annual profit outlook Wednesday.

The giant retailer reported second-quarter earnings of $234 million, or 37 cents per share, compared with earnings of $611 million, or 95 cents a share, in the same period last year.

Its shares closed up 1.8% to $60.33 on Wednesday.

The company announced on Aug. 5 that costs related to last year's data breach and other special items would reduce second-quarter earnings.

Excluding expenses related to the breach, losses from early debt retirement and other items, Target earned 78 cents per share, in line with its lowered guidance for the quarter. Its adjusted earnings in last year's second quarter were 98 cents a share.

Target said breach-related expenses cost it $111 million before taxes last quarter and $146 million for the year to date. Those expenses are after $90 million in insurance reimbursements since the breach's discovery last December.

The retailer reduced its profit outlook for the year to a range of $3.10 to $3.30 a share, down from previous guidance of $3.60 to $3.90. It earned $3.07 a share in its last fiscal year and $4.52 a share in the year ending Feb. 2, 2013.

The company generated $17.4 billion in sales, up 1.7% over last year. But average sales per store have fallen in the past year, dropping 4.7% to about $37.8 million, according to market research company eMarketer.

It said Wednesday that second-quarter U.S. sales at stores open at least a year were flat, in line with expectations. In Canada, where Target operates 130 stores, sales grew 63.1% to $449 million, up from $275 million in 2013's second period, as the business benefited from new stores opening. But same-store sales fell 11.4%.

Target has struggled to give Canadian shoppers attractive prices and manage its inventory, sometimes running out of popular items.

The company still has hopes of winning over Canada. Chief Financial Officer John Mulligan says Target is committed to reconfiguring supply chain systems to ensure product is always in stock and upping product assortment after Canadian shoppers complained they weren't getting the same merchandise as they could buy in U.S. stores.

Mulligan says there are still signs of improvement across the business. Store traffic took a hit after the data breach and is still recovering. Traffic was off 1.3% in the second quarter, but after the breach it was down more than 5%. Meanwhile, digital sales grew more than 30%.

Omnichannel initiatives — aimed at creating a seamless shopping experience for shoppers in stores and digitally — is one of CEO Brian Cornell's main priorities as he takes over the company. Cornell was named CEO at the end of July and took on the post Aug. 12. He replaces former CEO Gregg Steinhafel, who stepped down in May. Mulligan served as CEO in the interim.

Mulligan says shoppers have largely moved on from last year's crippling data breach, and store growth is now primarily reflective of an intensely competitive retail environment and the fact that consumers are still being cautious with their spending.

"The vast majority of guests have come back to us," he says, adding that Target is committed to bringing back the exciting merchandise assortment it built its brand on, a strategy analysts say Target has strayed from in recent years.

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