Target is heading into the holiday season with a gloomy outlook. The retailer reported that its sales and profits fell short of analysts’ expectations and also lowered its profit forecast for the quarter. Shares fell nearly 20% in pre-market trading.
Target’s stock fell $28.78, or 18.5%, to $127.22 in premarket trading.
The retail chain said third-quarter sales rose 1.1% to $25.7 billion and net income fell 12% to $854 million, or $1.85 per share. Analysts surveyed by FactSet had expected revenue of $25.9 billion and earnings per share of $2.30.
Neil Saunders, an analyst at GlobalData, said Target is struggling to attract inflation-weary consumers. Many people are seeking discounts or refocusing on essential items. He added that the retailer was struggling in the most recent quarter and lowering its outlook for this quarter may not bode well for the holiday season.
“Sales were virtually flat, compared to very weak conditions in previous years,” Saunders said in a research note Wednesday. “And this occurred during a quarter where several banner events, including back-to-school, Halloween, trading weeks and days, should have helped drive spending.”
On a conference call with investors, Target CEO Brian Cornell noted that shoppers are being cautious about their purchases.
“Consumers are telling us that their budgets are still tight and they are shopping carefully,” Connell said on the call. Consumers are “focusing on deals and stocking up when they find a deal.”
Target’s results contrast with its competitor, Walmart. Walmart reported another strong sales quarter this week and offered a rosy outlook.
contributed to this report.
