By  on August 5, 2014

Target Corp. on Tuesday updated its second-quarter guidance, saying it expects to record $148 million in breach-related expenses.

The charge will be offset by $38 million in an insurance receivable. Target suffered a data breach in December.

The company also said it completed tender offers during the second quarter in which the company paid $1 billion to retire, at market value, $725 million of its long-term debt. It incurred a pretax loss of $285 million, or 27 cents a share, which will be recognized as net interest expense in the second quarter.

For now, the company expects second-quarter adjusted earnings per share of about 78 cents, compared with earlier guidance of 85 cents to $1 a share.

Sterne Agee’s Charles Grom said the adjusted EPS guidance reflects “flat” U.S. comp sales, with “lower-than-expected” earnings before interest, taxes, depreciation and amortization margins driven by promotional markdowns and “somewhat softer-than-expected sales/continued investments to clear excess inventory” in Canada. He also noted that the expenses to be charged in connection with the data breach include an “increase to the accrual for estimated probable losses for a vast majority of the claims, including claims by payment card networks.”

The company will report the quarter’s results on Aug. 20, the same day in which executives will also update expectations for the balance of fiscal 2014 during a conference call to Wall Street analysts.

Shares of Target fell 4.4 percent to close at $58.03 in trading on the New York Stock Exchange.

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