Target Struggles with Sales as Rivals Outpace Performance

Target's holiday-quarter performance lags behind expectations, with a forecast of flat sales and reduced profits. In contrast, Walmart sees growth by capturing market share and attracting high-income shoppers. Efforts to drive sales through discounts and promotions at Target have faltered amid economic challenges and competition.

Target's holiday-quarter sales and profit forecasts have fallen below expectations, leading to a 16% drop in its shares during premarket trading. The retailer, known for its value offerings, anticipates flat comparable sales and profits ranging from $1.85 to $2.45 per share. Analysts previously anticipated a 1.64% increase in sales and a profit of $2.66 per share.

Walmart, on the other hand, reported its third consecutive rise in annual sales and profit forecasts, as it gained market share in groceries and other merchandise. Target's various price reductions and promotions have not significantly boosted its foot traffic or consumer spending, as shoppers remain highly promotion-driven.

Economic uncertainties and extended promotions by rivals like Walmart and Amazon continue to challenge Target's strategies. Persistent issues in high-margin categories and increased costs from a port strike impact were noted by the company's executives, indicating ongoing pressure as it heads into the holiday shopping season.

(With inputs from agencies.)