Target Corp (NYSE:TGT) shares dropped over 18% in pre-market trading on Wednesday after the retailer posted lower third-quarter profit and warned of a soft holiday period ahead.
Pre-tax earnings fell by 11.6% to $1.09 billion during the third quarter, as revenue climbed by 1.1% to $25.67 billion and gross margins fell by 0.2% to 27.2%.
Analysts had been expecting revenue of $25.90 billion, while earnings also undershot forecasts of $2.30 per share at $1.85, reflecting Target’s biggest miss in two years.
“Unique challenges” hit the business over the quarter, chief executive Brian Cornell said, including softness in discretionary categories and October’s strike among US port workers.
Guidance was laid out for flat comparable sales over the coming quarter and key holiday period.
Full-year adjusted per-share earnings were expected to sit between $8.30 and $8.90, Target added, against market forecasts for $9.00 to $9.70.
“It’s disappointing that a deceleration in discretionary demand combined with some cost pressures have caused us to take our guidance back down after raising it last quarter,” chief operating officer Michael Fiddelke said in a post-earnings call.
Shares fell 18.3% in pre-market trading.