=Target (TGT) reported earnings on Wed 8/17/16 (b/o)

Target beats by $0.10, reports revs in-line; guides Q3 EPS below consensus; lowers FY17 EPS; sees 2H comps below estimates :

• Reports Q2 (Jul) earnings of $1.23 per share, excluding non-recurring items, $0.10 better than the Capital IQ Consensus of $1.13; revenues fell 7.2% year/year to $16.17 bln vs the $16.17 bln Capital IQ Consensus, reflecting a 1.1% decrease in comparable sales vs. down 0-2% guidance, combined with the removal of pharmacy and clinic revenues from this year's results.
  • Comparable digital channel sales grew 16% and contributed 0.5 percentage points to comparable sales growth. Comparable sales growth in Signature Categories outpaced total comparable sales by ~3 percentage points
  • Segment earnings before interest expense and income taxes (:EBIT), which is Target's measure of segment profit, were $1,241 million in second quarter 2016, a decrease of 8.1% Y/Y.
  • EBITDA margin 11.2% vs. 10.5% guidance.
• Co issues downside guidance for Q3, sees EPS of $0.75-0.95 vs. $0.96 Capital IQ Consensus Estimate.
• Co issues guidance for FY17, lowers EPS to $4.80-5.20 from $5.20-5.40vs. $5.13 Capital IQ Consensus Estimate. 
• While Target has plans in place to strengthen results over time, based on the current retail environment the Company believes it is prudent to lower its expectations for comparable sales in the second half of the year. In both Q3 and Q4, Target now expects comparable sales growth in the range of (2.0%) to flat -- consensus for Q3 +1.2%, Q4 +1.5%.