Target (TGT) stock is down 3% after the discount retailer revised its year-end holiday sales forecast.
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The company lifted its fourth-quarter sales outlook, saying more consumers turned to its stores and website for holiday shopping. But at the same time, the Minneapolis-based retailer did not raise its profit outlook for the fourth and final quarter of 2024, sending its share price downward.
Target said in a news release that it now expects comparable sales in Q4 2024 to grow by about 1.5%. That’s better than its previous outlook that called for flat sales over the Christmas period. Unfortunately, Target left unchanged its Q4 profit forecast that calls for earnings per share (EPS) of $1.85 to $2.45 and full-year earnings of $8.30 to $8.90 a share.
Target is scheduled to report full fourth-quarter earnings on March 4.
Struggling Sales
The revised holiday guidance comes as Target struggles to attract shoppers and boost its sales. The company lowered its profit guidance last November after announcing its biggest earnings miss in two years. The company has blamed its troubles on softer sales of discretionary items and other non-essentials, as well as on a short-lived port strike in the U.S. that occurred last October.
Unlike its main competitor Walmart (WMT), Target has not expanded into groceries, which has proven to be a major draw for consumers in the current inflationary environment. As a result, Target has had to rely on discounts and sales promotions to try and attract customers, often at the expense of its profit margins.
In May of last year, Target cut prices on 5,000 frequently purchased items such as diapers, bread, and milk to try and attract consumers. The company later said that it had cut prices on more than 10,000 items heading into the December holidays. TGT stock has fallen 3% in the past 12 months.
Is TGT Stock a Buy?
The stock of Target has a consensus Moderate Buy rating among 28 Wall Street analysts. That rating is based on 13 Buy and 15 Hold recommendations delivered in the last three months. The average TGT price target of $144.69 implies 11% upside from current levels.
