Target Corporation (NYSE:TGT) shares nosedived following a big earnings miss in 3Q, which the company blamed on shrinking inventories and profit margins.
The retail giant’s adjusted earnings per share came in at $1.54, a far cry from the $2.17 expected by analysts.
Meanwhile, inventory only increased 14.4% year-over-year, which was much softer than the 2Q growth rate of 36%, posing problems for the holiday season.
READ: Target reports bigger-than-expected 90% drop in quarterly earnings
Target also lowered its guidance for 4Q, “based on softening sales and profit trends that emerged late in the third quarter and persisted into November".
According to a release, the company said it “believes it is prudent to plan for a wide range of sales outcomes in the fourth quarter, centered around a low-single digit decline in comparable sales, consistent with those recent trends".
All told, Target is now planning a wide range for its fourth quarter operating margin rate centered “around 3%".
The news sent Target shares reeling. By midday trading in New York, shares were down over 12%.
Investors were clearly spooked, sending shares of peers Best Buy and Costco (NASDAQ:NA:COST) also lower on Wednesday.
Walmart, however, escaped Wall Street’s wrath: shares of the retailer were up around 0.6% following the release of its fiscal 3Q 2023 results that showed a healthy EPS beat as its groceries division boosted sales.
Contact Angela at angela@proactiveinvestors.com
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