Target Shares Fall Despite Company Beating on Earnings Estimates

Shares of Target were falling on Wednesday after reporting fiscal third quarter financial results that beat on earnings.

The big box retailer saw its stock drop nearly 5% to $253.80 even though the company also raised its forecast.

Looking ahead, Target says that comparable sales could rise at between a high single-digit and low double-digit pace in the holiday period. Previously, it estimated a high single-digit increase.

CEO Brian Cornell said the company is focused on value as prices of food, gas and more rise, and consumers face sticker shock.

“We are protecting prices,” he said. “It’s as important to our guests this year as safety has been throughout the pandemic.”

For the third quarter, Target topped analysts’ predictions as sales jumped 13%.

For the period ended October 30th, the company reported earnings per share of $3.03 adjusted, compared to $2.83 expected per Refinitiv. Revenue at $25.65 billion was also better than the $24.78 billion expected, per Refinitiv.

Net income grew to $1.49 billion, or $3.04 per share, from $1.01 billion, or $2.01 per share, a year earlier. Excluding items, the retailer earned $3.03 per share, higher than the $2.83 per share expected by analysts surveyed by Refinitiv.

Comparable sales in the third quarter grew 12.7%, as shoppers made more trips to stores and visits to the comapny’s website. That exceeded the 8.2% increase that analysts expected, according to a StreetAccount survey.

Store comparable sales increased 9.7%, while digital comparable sales grew 29%. (These metrics were up 9.9% and 155%, respectively, in the year-ago quarter.)

Chief Operating Officer John Mulligan said the company is making long-term investments to prepare for a spike in demand and adjust to the new ways that consumers shop.

Mulligan said on the earnings call that the retailer is adding storage capacity at more than 200 high-volume stores, adding temporary storage areas to support seasonal peaks and doubling the number of parking spots for curbside pickup compared with last year.

“The holiday season is off to a great start, but we’ve got many weeks in front of us and think we’re going to continue to see that strength throughout the holiday season right up to Christmas Eve,” Cornell said.

Target’s shares are up about 51% this year so far.

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.