Target released its second quarter earnings report before opening bell this morning, posting adjusted earnings of $1.23 per share, beating the consensus of $1.12 per share, on $16.17 billion in revenue, which was in line with consensus. In last year’s second quarter, the big box retailer posted $17.43 billion in sales.

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Target’s comparable sales fall more than expected

GAAP earnings were $1.07 per share, marking a decline of 11.6% from last year’s second quarter. Comparable sales fell 1.1%, which was worse than the consensus of a decline of 0.9%. Comparable digital channel sales increased 16% and contributed half a percentage point to the company’s comparable sales growth. EBIT declined 8.15 to $1.24 billion. The EBITDA margin was 11.2%, while the EBIT margin was 7.7%. The gross margin was 31.3%, an increase from last year’s 30.9% on the back of the sale of its pharmacy and clinic businesses and ongoing cost cuts.

“While we recognize there are opportunities in the business, and are addressing the challenges we are facing in a difficult retail environment, we are pleased that our team delivered second quarter profitability above our expectations,” Target Chairman and Chief Executive Brian Cornell said in a statement. “Looking ahead, we remain focused on our enterprise priorities as we continue to see the benefits of investing in Signature Categories, store experience, new flex-format stores and digital capabilities. Although we are planning for a challenging environment in the back half of the year, we believe we have the right strategy to restore traffic and sales growth over time.”

Target repurchased 19 million shares at an average price of $70.91 per share for a total of $1.35 billion during the second quarter. The company also paid $330 million in dividends to shareholders.

Target cuts guidance

Target expects third quarter adjusted earnings to be between 75 cents and 95 cents per share, which is very week compared to consensus of 96 cents per share. The big box retailer expects comparable sales in the third and fourth quarters to be between a decline of 2% and flat.

The company also slashed its full-year earnings guidance to a range of $4.36 to $4.76 per share from the previous guide of $4.76 to $4.96 per share. For the full year, Target expects adjusted earnings of $4.80 to $5.20 per share, compared to the consensus of $5.13 per share and the previous outlook of $5.20 to $5.40 per share.

Shares of Target slumped by as much as 5.265 to $71.51 in premarket trades this morning.