Target Dives On Huge Earnings Miss After Walmart's Holiday Cheer

Target (TGT) reported fiscal third-quarter earnings early Wednesday that were well below views, with the discounter slashing guidance for the key holiday fourth-quarter. Target stock dived before the open.

That stands in sharp contrast to rival Walmart (WMT). On Tuesday, the Dow Jones retail giant beat views and signaled a solid start to the key shopping season.

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Target Earnings

Target earnings fell 12% vs. a year earlier, while revenue rose just 1% to $25.67 billion. Analysts expected the big-box retailer to deliver earnings of $2.30 per share on sales of $25.876 billion, FactSet shows. It was the biggest EPS shortfall in two years.

Same-store sales edged up 0.3%, below forecasts for 1.5% growth.

For the fourth quarter, Target sees EPS of $1.85-$2.45, well below analyst targets of $2.65. Comparable sales are now seen flat.

Executives cited continued weakness in "discretionary" categories and costs in preparing for the short-lived ports strike.

Target Stock

Target plunged 18.8% to 126.70 in premarket stock market trading, signaling a 52-week low/

On Tuesday, Target stock dipped 0.4%, failing to extend Monday's bounce from the 50-day and 200-day moving averages, MarketSurge charts show.

Target stock had already lagged Walmart (WMT) and Costco (COST) shares by a mile in the past year. A larger focus on discretionary goods weighed on the bull's-eye retailer, though it also sells food and consumables. More higher-income consumers, Target's traditional audience, sought out Walmart for value as inflation rose.

On Tuesday, Walmart raised full-year guidance after beating earnings and revenue estimates for its third quarter. Analysts called recovering merchandise sales a highlight of the quarter.

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Other Retail Earnings: TJX, BJ's Wholesale Club

Among other off-price and discount retailers, TJX (TJX) is due before the markets open. Analysts forecast a 6% EPS increase vs. a year ago on a 5% revenue gain. TJX stock lost 10 cents a share on Tuesday, closing below a buy point.

BJ's Wholesale Club (BJ) is due before Thursday's open. TJX peer Ross Stores (ROST) is on deck late Thursday. On Tuesday, BJ stock pared gains after briefly topping a buy point, closing down 0.6%. Ross Stores fell 1.4%.

Investors are watching management commentary on inflation, deflation and consumer financial health. Meanwhile, analysts say potential Trump tariffs could become a new headache for retailers.

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