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Target Comparable Sales and Shares Fall

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Target Comparable Sales and Shares Fall

Heading into the holiday season all eyes have been concentrated on the number of retail names set to report earnings over the next couple weeks. Shares of Target (NYSE:TGT) traded to the downside on Thursday morning following the company’s quarterly results before the market open. The company reported comparable sales rose a smaller than expected 0.9 percent in the third quarter, as a result of “constrained” consumer spending. The company would go onto it lower its full-year profit forecast for largely the same reasons.

Target, which competes against numerous other discount retailers, earned $341 million, or 54 cents per share, in the fiscal third quarter, down from $637 million, or 96 cents per share, a year earlier. On an adjusted basis, the company earned 84 cents per share. These results sadly came in below analyst expectations and as a result weakness is being felt in the pre-market session. Analysts were expecting comparable sales to rise 1.3 percent. Target now expects to earn an adjusted profit per share of $4.59 to $4.69, compared with an earlier range of $4.70 to $4.90.

Going into the rest of the week it is likely we will see a number of analyst commentary on the lower than expected guidance. Similar results were seen just a week ago when Walmart reported dismal results. In the coming months we will see the true strength of the U.S. economy and holiday season. Until then, initial prospects of holiday spending and consumer strength remain weak. Shares of the company were to the downside by 3.5 percent to $64.10 at the time of this writing. Year to date, shares of Target have underperformed the broader averages. Shareholders are up only 12 percent in comparison with the 25 percent returns seen by the S&P 500.

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