Target's managing director has flagged more pain for the struggling Wesfarmers-owned department store chain after slow winter sales forced more stock clearance activity.
Stuart Machin said the chain's first-half performance would be affected by heavy discounting.
However he said the impact of the clearance activity would not be as great as the past financial year.
In presenting Target's annual results alongside Wesfarmers colleagues, Mr Machin said the clearances had been prompted by slow sales in May and June.
Target's earnings for 2013-14 were down 37 per cent to $86 million. Wesfarmers' result included a $677 million impairment on Target's goodwill.
"This was always going to be a transitional year for Target with earnings affected by the necessary implementation of our 'first price right price' strategy which ran ahead of coursing improvements," Mr Machin said.
"I remain confident that we're doing the right thing to make Target great again," Mr Machin said.
Wesfarmers today said it would give an extra $1.1 billion back to shareholders after lifting its full year profit 19 per cent.
The Coles owner made a net profit of $2.69 billion in the year to June 30, up from $2.26 billion in the previous year.
Earnings from Coles were up nine per cent to $1.67 billion.
Wesfarmers expects further growth from its retail businesses in 2014/15, while target will continue to face challenges.
"Growth in underlying earnings during the year was largely driven by stronger performance in Coles and Bunnings and lower financing costs," Wesfarmers managing director Richard Goyder said.
Wesfarmers will return $1.1 billion to shareholders through payments of $1 per share, though the distribution is contingent on a ruling from the Australian Taxation Office (ATO).
The payment will come on top of Wesfarmers' final dividend of $1.05 per share, and a special dividend of ten cents per share, which takes its full year dividends to $2 per share.
Mr Goyder said Coles lifted sales despite another slide in grocery prices.
"Coles delivered another good result, with sales growth accelerating in the final quarter," he said.
"Increased earnings were driven by improvements in customer value, increased fresh sales, a better store experience and lower costs of doing business."
He said Coles' liquor store business did not perform as well, but earnings were expected to grow following a restructure of the division.
Meanwhile, Bunnings lifted earnings 8.3 per cent during the year, while earnings from Officeworks and Kmart were up 10.8 per cent and 6.4 per cent, respectively.
Mr Goyder said strong competition pushed down the department store's prices and profit margins, though the company cut costs and improved store standards during the year.
He said the lower prices were also the result of Wesfarmers' strategy to turn around the business and attract more customers.
Outside of the retail businesses, earnings from Wesfarmers' chemicals division were down 11.2 per cent to $221 million, while earnings from the resources division were down 12.2 per cent and industrial and safety earnings were also lower.
At 11.05am, Wesfarmers shares were up 96.5 cents, or 2.19 per cent, to $44.965.