Target drops after trimming its profit outlook as demand softens
The company reported earnings on Wednesday.
Target fell in premarket trading after it reported earnings results on Wednesday: headline numbers beat Wall Street expectations, but the company slashed its full-year guidance ahead of the crucial holiday shopping season.
The retailer reported adjusted earnings per share of $1.78, beating the $1.71 analysts polled by FactSet were expecting. But it also cut its full-year guidance, now predicting full-year adjusted earnings per share to hit $8 at most, down from the $9 ceiling it had previously set.
Target reported $25.3 billion in sales, higher than the $23.3 billion the Street was penciling in. But it also reported that comparable-store sales declined by 2.7%, compared to the 2.1% decline analysts were predicting for that closely watched metric.
“Target’s digital sales are growing, but brick-and-mortar revenue accounts for about 80% of the total, making it crucial to get shoppers back into stores, where discovery and impulse purchases are key,” wrote Bloomberg Intelligence senior industry analyst Jennifer Bartashus. “Traffic declines and the loss of sales momentum in 3Q during the back-to-school season — often considered a preview for holiday demand — mean Target will need to execute well to achieve its 4Q forecast for a low-single-digit decline in sales.”
Target has been struggling to dig out of a sales slump and has been lowering prices to win shoppers back. Meanwhile, souring consumer sentiment and tariffs have been a headwind for retail as a whole. The retailer told reporters on Wednesday that it plans to spend $1 billion more next year to improve stores.
