Target (TGT) shares tumbled 20% to their lowest point since November 2023 shortly after markets opened Wednesday following the release of the retailer’s third-quarter earnings report, as it missed estimates for sales and profit.
The retailer reported $25.67 billion in revenue, up from $25.40 billion a year ago but below the $25.89 billion analysts expected, according to estimates compiled by Visible Alpha
Target also reported $854 million in net income, or $1.85 per share, down from $971 million and $2.10 per share a year ago. Analysts had expected $1.05 billion and $2.28 per share.
Target Chief Executive Officer (CEO) Brian Cornell said the company saw a “volatile operating environment” in the quarter along with “some unique challenges and cost pressures that impacted our bottom-line performance.”
The retailer also lowered its expected full-year EPS outlook to a range of $8.30 to $8.90, down from $9.00 to $9.70 last quarter. Its fourth-quarter EPS estimate of $1.85 to $2.45 is below the $2.66 consensus estimate.
Target shares, which had gained almost 10% on the year through Tuesday’s close, were down 21% to $121.84 soon after markets opened. That erases Target’s gains since the start of the year, putting them at their lowest point since last November, when shares rose nearly 18% the day Target reported third-quarter fiscal 2023 results.
Comparable Store Sales Decline 1.9%
Target, which has worked to regain market share after acknowledging earlier this year that higher prices had driven some customers away, saw comparable store sales decline by 1.9%. Thanks to a 10.8% increase in comparable digital sales, overall comparable sales rose 0.3%.
Last quarter, executives said they saw a consumer “willing and able to spend” as discretionary spending trends were improving in categories like apparel and beauty.
The company lowered prices on thousands of popular products over the summer, and recently announced a schedule of daily and weekly sales that will run through the holiday season, including a three-day “Early Black Friday” sale that took place earlier this month.
Rival Walmart (WMT) beat estimates in its earnings report Tuesday, and a week full of data from competitors like TJX Companies (TJX), BJ’s Wholesale Club (BJ), and others will also provide investors insight into the health and behaviors of the U.S. consumer ahead of the holiday shopping season.
Source: Investopedia, https://www.investopedia.com/target-earnings-q3-fy2024-8747788
