NEW YORK – A cautious outlook on the crucial holiday season overshadowed progress Target made in bringing more customers to its stores, pulling its shares down sharply. The shares of other retailers fell as well, even though overall economic figures show people still spending.
Target reported higher customer traffic numbers and better sales at established stores as its investments in improving its stores and online capabilities appear to be paying off. But those changes, as well as its moves to cut prices and raise employee wages, are dragging down profits.
The discount chain reported a 21 percent drop in fiscal third-quarter profit.
Seeking to soothe investors, CEO Brian Cornell said that while the fourth quarter is “always competitive,” the retailer is entering the holiday period with “lots of confidence.”
FILE – This Monday, Aug. 11, 2015, file photo, shows a Target store in Miami. Target Corp. reports earnings Wednesday, Nov. 15, 2017. (AP Photo/Lynne Sladky, File)“While the bulk of the season is still ahead of us, we are very happy to see how these early efforts have set the tone for the season,” Cornell said.
Target reported a third-quarter profit of $480 million, or 88 cents per share, for the period ending Oct. 28. That compares with $608 million, or $1.06 per share, a year earlier.
Earnings, adjusted for one-time items, came to 91 cents per share, or a nickel better than Wall Street had expected, according to a survey by Zacks Investment Research.
Revenue at $16.67 billion exceeded forecasts and was up from $16.4 billion in last year’s third quarter.
For the quarter ending in January, Target expects earnings per share of $1.05 to $1.25, shy of Wall Street projections for $1.27. The company expects full-year earnings of $4.40 to $4.60 per share. That compares with prior guidance of $4.34 to $4.54 per share.
Shares of Target Corp. were down more than 9 percent, or $5.65 to $54.44 in Wednesday trading.