Target struggles in the third quarter despite price cuts
Target etched out a slim sales increase in the third quarter but profits slumped as inflation-weary customers pulled back on spending and costs related to a dockworker strike in October dragged on results
NEW YORK — Target etched out a slim sales increase in the third quarter and profits slumped as inflation-weary customers pulled back on spending and costs related to a dockworker strike in October dragged on results.
The Minneapolis retailer fell short of Wall Street expectations for the quarter and its outlook for the final three months of the year also disappointed industry analysts in an environment in which Americans are still spending, but being more selective.
The week quarterly performance is concerning particularly because Target has cut prices on holiday goods, including a Thanksgiving deal that put the cost of the holiday meal below where it was last year.
The most recent quarter at Target stands in stark contrast to rival Walmart, which reported another quarter of stellar sales Tuesday and released optimistic projections for the holiday season. And last month, Amazon reported a boost in its quarterly profits. Quarterly sales jumped 11% at Amazon, exceeding expectations.
Target's shares plummeted 17% in premarket trading Wednesday.
“We encountered some unique challenges and cost pressures that impacted our bottom-line performance,” said Chairman and CEO Brian Cornell.
Target posted net income of $854 million, or $1.85 per share, in the quarter ended Nov. 2, far short of the $2.30 analysts were looking for, according to FactSet, and down from $971 million, or $2.10 per share, in the year-ago period.
Sales rose to $25.67 billion, up from $25.4 billion last year, but fell shy of Wall Street expectations.
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