On Wednesday Target reported a higher traffic in at established stores and a bigger-than-expected increase in quarterly same-store sales.
However, its fourth-quarter forecast which includes key holiday sales is lower than expectations of analysts. The results sent Target shares falling more than 4 percent before the market’s open.
Target’s CEO Brian Cornell said in a company release, “While we expect the fourth-quarter environment to be highly competitive, we are very confident in our holiday season plans.”
Like other traditional retailers, Minneapolis-based Target is in powerful competition with Wal-Mart and Amazon.com.
In February, Target announced that it was planning to spend $7 billion to overhaul its stores and online businesses over the next few years. The turnaround plan included revamping existing locations, opening smaller stores and making heavy investments online.
Target is also offering new private-label brands and expanding in the grocery. Some of those brands will be available for the first time this holiday season. That includes much-expected “Joy Lab,” “A New Day” and “Hearth & Hand.”
Moody’s lead retail analyst Charlie O’Shea said, “Q3 results for Target reflect the impact of its short-term investments for long-term benefit, with margins softening slightly as a result of Target’s tactical price investments, as well as the persistent market share battles with Amazon and Wal-Mart in multiple categories.”
The company is now expecting full-year earnings between the ranges of $4.40 to $4.60 per share. Target Corp’s shares were down more than 5 percent or $3.19 to $56.90 in pre-market trading.