Target (NYSE:TGT) fell sharply on Wednesday even as the fourth-largest U.S. retailer reported a higher quarterly profit and raised the low end of its fiscal-year forecast.
Target reported slower growth in online sales and margin pressures.
Shares dropped 6% to $68.55 at 10:58 a.m. in New York.
The Minneapolis, Minnesota-based company said growth in its "signature categories," including apparel and items for children, babies and health and wellness, was 2.5 times faster than the company average in the third quarter ended on November 1.
Digital sales, which include online and mobile increased 20%, outpacing the industry but missing Target's expectations, Chief Financial Officer Cathy Smith said. The company said in March it expected a 40% increase for the year.
Smith said the slowdown is primarily due to a drop in electronics sales.
Target reported a profit of $549mln, or $0.87 per share, in the period ended October 31, up from $352mln, or $0.55 per share, a year earlier.
Stripping out special items, earnings rose to $0.86 per share in the third quarter from $0.79 a year earlier.
Analysts on average were expecting a profit of $0.86, according to Capital IQ.
Third-quargter sales increased 2.1% to $17.61bn, compared with the Wall Stree consensus of of $17.57bn.
The company lifted the low end of its fiscal-year earnings forecast to $4.65 per share from $4.60. It kept the high end at $4.75.
Meanwhile, Staples decreased 3.5% to $12.01 after the world's largest retailer of office products said profit slipped in its latest quarter as sales remained under pressure.