Target Stocks Fall After Earnings Miss Projections

On By Littum

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Shares of Target fell 16% in premarket trading on Wednesday, on pace for what would be the stock’s worst day in more than two years, after the retailer reported third-quarter earnings and revenue that fell short of analysts’ expectations.

Key facts

Target’s shares fell below $130 premarket around 10 p.m. 9:05 a.m. EST, heading for the company’s biggest one-day selloff since a nearly 25% drop on May 18, 2022, when the retailer warned of “unexpectedly high costs” that caused the company’s profits to dive by 52%.

The retailer reported third-quarter earnings of $1.85 per share and revenue of $25.7 billion, falling short of analysts’ expectations of $2.30 per share and $25.9 billion, respectively, according to FactSet.

Brian Cornell, CEO of Target, reportedly said the company’s most recent quarter “presented several challenges,” including a decision to redirect shipments of holiday items in anticipation of a dock workers’ strike last month, which briefly boosted costs.

Traffic across Target’s stores and website grew 2.4%, the company reported, on top of a 10.8% year-over-year increase for digital sales, although comparable-store sales fell nearly 2%.

Even as the retailer drew more customers, Cornell said customers were less interested in the company’s discretionary items such as clothing and housewares.

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9%. That’s how much Target’s shares have risen this year before Wednesday, lagging behind the S&P 500’s 24.7% gain.

Key background

Target has struggled to get customers to buy its discretionary items, despite slashing prices on thousands of items in recent months. The company lowered prices on about 5,000 frequently purchased items in May, when Rick Gomez, Target’s CCO, said the retailer was aware that consumers “felt pressure to get the most out of their budget.” Target plans to cut prices on more than 10,000 total items by end of holiday season, CNBC reported. In contrast to Target’s revenue dip, Walmart reported an increase in discretionary sales on Tuesday, with net sales expected to grow nearly 5% for the year. Walmart also reported earnings and revenue that were well above analysts’ expectations, sending shares up 3%.

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