Target on Tuesday cut its second-quarter earnings estimate—citing increased costs related to last year's massive holiday data breach, and higher promotions and discounts in North America.
"I don't think anybody cares so much about what the data breach is costing them except for the sales it might be costing them," said Jan Kniffen, chief executive of retail research and consulting firm J. Rogers Kniffen Worldwide Enterprises.
The former department store executive told CNBC's "Squawk Box" the real reason behind the retailer's earnings warning is "bad sales, bad gross margins due to promotional markdowns and the continuing train wreck in the Canadian segment."
On the news, the stock opened sharply lower on Wall Street. (Click here for the latest quote.)
The nation's third-largest retailer now forecasts adjusted earnings in the range of around 78 cents, compared with prior guidance of 85 cents to a dollar a share. It said same-store sales were flat in the U.S. and sales were weak in Canada in the quarter ended in July.
Target also said it expects breach-related costs to hit $148 million, partially offset by a $38 million insurance receivable.
Whether the data breach is still to blame for the sales problems or not, Kniffen argued, business was not that great even before the security concerns. "My contention is Target is not operating like Target used to operate. It's just become another discounter. ... They peaked in 2006. And it's been downhill from there on the cool factor."
"In America, you can't be just another discounter," he continued. "If you are, you have to compete everyday with Wal-Mart ... competing on price and competing in the grocery business with Wal-Mart is a losing proposition."
Last week, Target turned to an outsider and hired former PepsiCo and Wal-Mart executive Brian Cornell, 55, as CEO and chairman, after the May ouster of CEO Gregg Steinhafel. Chief financial officer John Mulligan—who's run the retailer on an interim basis—will return full time to his CFO duties after Cornell's appointment next Tuesday.
Target is set to report earnings in two weeks.
—By CNBC staff. Reuters contributed to this report.