Target shares slide after earnings implosion

The stock fell by more than 3% Thursday after a quarter that showed a surprising plunge in profits.

By InvestorPlace Nov 21, 2013 12:56PM

A Target department store sign in New York © Richard Levine/AlamyBy Burke Speaker


Target (TGT), an underperformer in 2013, was down more than 3% Thursday after releasing third-quarter earnings that showed profits plunging 47%.


The fall in earnings was mostly a result of expenses related to its Canadian expansion, The Minneapolis Star Tribune reported.


The company reported profits of $341 million, or 45 cents per share, which was well below last year's $637 million, or 97 cents a share. However, adjusted earnings came to 84 cents for the quarter, which was well above analyst expectations for 63 cents.


The real sticking points for the quarter were sales. Revenues increased 4% to $17.3 billion but fell under the analyst bar, and same-store-sales came in at 0.9% growth to miss the consensus estimate for 1.3%. Also, Target lowered full-year earnings forecasts to a range of $4.59 to $4.69 per share from a range of $4.70 to $4.90.

Target's stock has had a rocky road after an end-of-summer decline, and currently sits just 8% in the black year-to-date, vs. roughly 25% returns for the Standard & Poor's 500 Index ($INX).


Just a few days ago, InvestorPlace noted that Target earnings could take a hit because of cautious consumers and expansion woes in Canada, which have given TGT shareholders some room for pause. As Susan Aluise wrote:

"(The move) could eventually be a driver of growth for Target stock. But for now, the expansion is weighing on Target earnings. The company, which has opened 91 stores so far this year and plans an additional 33 by year’s end, has struggled with everything from higher costs to empty shelves so far."

Retail stocks across board are getting pounded this morning, with Dollar Tree (DLTR), Sears (SHLD) and Abercrombie & Fitch (ANF) all opening in the red.


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