The stock of Target (TGT) is down 20% after the discount retailer posted its biggest earnings miss in two years.
The results were especially disappointing given that Target had cut prices on thousands of items and launched its holiday sales early this year.
The Minnesota-based company reported earnings per share (EPS) of $1.85 U.S., which missed forecasts of $2.30 U.S.
Revenue in the period came in at $25.67 billion U.S., which also fell short of consensus expectations for $25.90 billion U.S.
Target missed Wall Street’s earnings per share estimate by 20%, its biggest miss in two years.
Owing to the poor third-quarter results, Target’s management team revised down their full-year guidance.
The company now expects full-year earnings of $8.30 U.S. to $8.90 U.S. a share. That’s lower than the $9 U.S. to $9.70 U.S. that was previously forecast.
Target added that it now expects fourth quarter comparable sales to be flat.
On an earnings call with analysts and media, management blamed the situation on softness in discretionary spending.
Target, which sells mostly clothing, home goods and other discretionary merchandise, has struggled to attract consumers in recent years.
Shoppers have been selective about spending after years of inflation and high interest rates.
Target announced in May that it would cut prices on 5,000 frequently purchased items, including diapers, bread and milk. It announced another wave of price reductions in October of this year.
Target said it will have lowered prices on more than 10,000 items this year by the end of the holiday season.
However, those price cuts weren’t enough to increase foot traffic at Target’s stores or lift the company’s financial performance.
Prior to today (Nov. 20), the stock of Target had increased 9% so far in 2024 to trade at $156 U.S. per share.