By Nandita Bose
(Reuters) - Target Corp reported third-quarter earnings and comparable sales below estimates on Tuesday at a time when a strong economy has boosted consumer spending at rival retailers, sending its shares sliding nearly 10 percent in premarket trade.
Target's performance spooked investors during the critical holiday season as competitors including Walmart Inc and Macy's Inc boosted sales during the same period.
The Minneapolis-based retailer said it gained market share in all key product categories in the quarter and remained confident it could reach its earlier full-year earnings outlook and hold its own during the key holiday season.
Target will offer free two-day shipping on hundreds of thousands of items through Dec. 22 with no minimum order or membership required.
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Sales at stores open at least a year rose 5.1 percent, short of analysts' estimates of a 5.21 percent increase, according to IBES data from Refinitiv. The company expects same-store sales to rise about 5 percent in the final quarter, signaling a slowdown ahead.
Profit missed expectations as price cuts, higher wages and investments in its online business ate into margins. Excluding items, Target earned $1.09 per share in the quarter, below the average estimate of $1.12 per share.
Gross margins were 28.7 percent, falling short of the estimate of 29.55 percent.
Online sales soared 49 percent during the quarter, outpacing a 41 percent rise in the second quarter and a 28 percent gain in the first quarter. But overall sales totaled $17.59 billion, below the average estimate of $17.8 billion.
Its third-quarter performance comes after it reported its best comparable-sales growth in 13 years during the second quarter.
Target shares dropped 9.8 percent at $70.15 in premarket trading.
(Reporting by Nandita Bose in New York; Editing by Jeffrey Benkoe)
Disclaimer: No Business Standard Journalist was involved in creation of this content
