These Aren't Cheery Days for Target

Target shares are trading down more than 20% on Wednesday on the heels of disappointing quarterly results. While the company managed a slight increase of 0.3% in comparable sales in the third quarter, it was well below the 1.5% analysts were expecting, reports the Wall Street Journal. More:

• More numbers: Target posted net income of $854 million, or $1.85 per share, in the quarter ending Nov. 2, well below the $2.30 analysts sought and down from $971 million in Q3 of last year. Though sales were up slightly year-over-year, to $25.67 billion from $25.4 billion, they too were short of Wall Street expectations.
• Rivals are on top: Walmart and Costco reported stronger quarterly results, with the AP calling Walmart's Q3 sales, released Tuesday, "stellar." CNN reports Walmart's US comparable sales were up 5.3% last quarter compared with Q3 2023. Quarterly sales at Amazon were up 11%.

• Lowered outlook: Target said that it now anticipate earnings per share to be between $1.85 and $2.45 in Q4; analysts had expected $2.65.
• It's not all bad: Target said quarterly customer traffic was up 2.4%, which meant 10 million more sales transactions compared to a year ago. Digital comparable sales jumped 10.8%.
• The AP's take: "The weak quarterly performance is concerning particularly because Target has cut prices on holiday goods, including a [$20] Thanksgiving deal that put the cost of the holiday meal below last year's [$25] total."
• The Journal's view: "Target has been pushing its own private-label brands and cutting prices on everyday goods, but the formula hasn't worked. The company's sales have been shrinking or flat for much of the past two years and executives have been promising better results."
• Target's perspective: "Overall, we are still seeing a consumer shop very cautiously in discretionary categories, and we are planning accordingly," said CEO Brian Cornell.
• The food angle: Less than a quarter of Target's sales come from food and beverages, compared to more than half of sales at Walmart; that makes Target more reliant on discretionary items like clothing and accessories.

(More Target stories.)