Target Shares Slump 17% On Q3 Miss, Weak Outlook

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(RTTNews) - Discount retailer Target Corp. (TGT) reported Wednesday that net profit for the third quarter declined 12.1 percent from last year, reflecting lower margins and a revenue decline. Both earnings per share and quarterly revenues missed analysts' estimates. The company also provided weak outlook for the fourth quarter and the full-year 2024, well below estimates.

In Wednesday's pre-market trading session on the NYSE, Target shares are down $27.16 or 17.54 percent to trade at $127.72.

"We saw several strengths across the business, including a 2.4 percent increase in traffic, nearly 11 percent growth in the digital channel, and continued growth in beauty and frequency categories," said Brian Cornell, chairman and chief executive officer of Target.

"At the same time, we encountered some unique challenges and cost pressures that impacted our bottom-line performance," Cornell added.

For the third quarter, net earnings surged to $854 million or $1.85 per share from $971 million or $2.10 per share in the year-ago quarter.

On average, 32 analysts polled by Thomson Reuters expected the company to report earnings of $2.30 per share for the quarter. Analysts' estimates typically exclude special items.

Total revenue for the quarter grew 1.1 percent to $25.67 billion from $25.40 billion in the same quarter last year, reflecting a sales growth of 0.9 percent and 11.5 percent increase in other revenue. Analysts expected revenues of $25.90 billion for the quarter.

Total comparable sales increased 0.3 percent in the quarter, driven by strong traffic and digital performance, with guest traffic growing 2.4 percent.

Comparable store sales decline of 1.9 percent, while digital comparable sales grew 10.8 percent, driven by nearly 20 percent growth in same-day delivery powered by Target Circle 360 and double digit growth in Drive Up.

Beauty comparable sales grew more than 6 percent. Food & Beverage and Essentials categories grew in the low-single digits.

Gross margin was down 20 basis points to 27.2 percent, reflecting higher digital fulfillment and supply chain costs due to the cost of managing higher inventory levels.

Looking ahead to the fourth quarter, the company expects earnings and adjusted earnings in the range of $1.85 to $2.45 per share on approximately flat comparable sales. Analysts expect the company to report earnings of $2.64 per share for the quarter.

For fiscal 2024, the company now projects earnings and adjusted earnings in a range of $8.30 to $8.90 per share. Previously, the company expected earnings and adjusted earnings in the range $9.00 to $9.70 per share. The Street is looking for earnings of $9.52 per share for the year.

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