Target Corporation (NYSE: TGT) delivered strong third-quarter numbers across the board Wednesday morning, but the stock dipped 8 percent after the company posted lackluster guidance for the critical holiday shopping season.
Target reported third-quarter earnings of 91 cents per share on revenue of $16.67 billion. Both numbers came in ahead of consensus analyst forecasts of 86 cents and $16.61 billion. Same-store sales also grew 0.9 percent compared to analyst expectations of a 0.4 percent increase.
Target even raised its full-year adjusted EPS guidance to range between $4.40 and $4.60, up from previous guidance of $4.34 to $4.54.
However, fourth-quarter consensus EPS estimates of $1.24 fell on the high end of Target’s guidance range of $1.05 to $1.25, and the market reacted negatively to the potential for a disappointing quarter. Target expects fourth-quarter same-store sales growth of 2 percent.
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“While we expect the fourth-quarter environment to be highly competitive, we are very confident in our holiday season plans,” CEO Brian Cornell said in a statement.
Earlier this year, Target said it would be investing $7 billion in several key initiatives, including launching private-label brands, expanding its grocery offerings and remodeling its stores. It is also investing heavily in online sales to compete with Amazon.com ( AMZN), Wal-Mart Stores ( WMT) and others. Target reported a 24 percent increase in online sales in the third quarter. Online sales now account for 4.3 percent of total sales.
Walmart reported 60 percent growth in online sales in the second quarter and will report its third-quarter numbers Thursday morning. Amazon and Walmart have both performed exceptionally well so far in 2017, while Target has been one of the laggards in the retail sector.
Telsey Advisory Group senior managing director Joseph Feldman says Target’s online shopping experience has plenty of room for improvement, but its mobile app is one of the best among its peer group.
“I think Target is kind of squeezed a little bit in the middle between…Walmart and Amazon, and I think Walmart and Amazon are doing a terrific job satisfying customer demand,” Feldman said on CNBC. “Target has done a good job in trying to bring some new brands into the store and transform the operation a little bit, but it’s still the early days in that transformation.”
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Telsey Advisory Group has a “market perform” rating and a $60 price target on Target stock.
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Target Corporation (TGT) Holidays Won’t Be So Happy originally appeared on usnews.com
