Target's Stock Tumbles Upon Weak Sales Report

Target on Wednesday missed Wall Street’s quarterly earnings and revenue expectations and posted only a slight uptick in customer traffic, despite the discounter's price cuts on thousands of items and its early holiday sale. The big-box retailer reversed course and cut its full-year profit guidance, just three months after hiking that forecast. Target now expects fourth-quarter comparable sales to be approximately flat.

On a call with reporters, Target CEO Brian Cornell said “lingering softness in discretionary categories” and costs associated with rushing shipments and preparing for the short-lived port strike in October hurt the company’s quarterly performance.

Total Retail's Take: Quite the different feeling for Target the day after one of its primary competitors, Walmart, announced strong third-quarter earnings and revenue. For Minneapolis-based Target, generating incremental foot traffic in its stores, and then getting those increasingly price-conscious shoppers to spend more freely, has weighed heavily on the company's financial performance. One step Target has taken to win increased share of wallet from cautious consumers is to drop prices. Target said it will have lowered prices on more than 10,000 items this year by the end of the holiday season. Yet for now that approach doesn't seem to be enough. As the holiday shopping season kicks into high gear next week, Target will be looking to acquire a higher percentage of discount-savvy shoppers, attracting them with core staples (e.g., groceries) and then getting them to purchase within discretionary categories (e.g., apparel).