Target Stumbles in Holiday Quarter as Walmart Thrives

Target faces declining holiday-quarter profits due to competition from Walmart and other retailers, despite efforts to lower prices. With flat sales, increased costs, and inventory challenges, Target struggles amid high consumer inflation and changing shopping behaviors, notably losing market share to Walmart, which benefits from high-income household sales.

In a stark contrast to its major competitor, Target disclosed on Wednesday that its forecast for holiday-quarter comparable sales and profits fell below estimates, leading to an 18% drop in shares. Value-focused consumers opting for essentials from competitors like Walmart are hindering Target's sales momentum.

Target anticipates stable sales with profits ranging from $1.85 to $2.45 per share, missing analysts' optimistic expectations of 1.64% sales growth and $2.66 per share in profit. Meanwhile, Walmart's revised annual sales and profit forecasts reflect its continued gain in market share in groceries and merchandise.

Target's preparatory efforts for potential shipping delays due to port strikes and its strategic price cuts across essential and gift categories have yet to magnetize shoppers. The company has slashed its annual profit forecast, while shopper visits modestly increased. Persistent promotional reliance keeps Target struggling even as consumer budgets remain tight.

(With inputs from agencies.)