Target CEO 'guiding for some conservatism' as the retailer misses earnings estimates ahead of the holidays

Earnings analysis

Here's what Target reported for the third quarter, compared to Wall Street analyst estimates compiled by Bloomberg:

Net sales: up 1.1% year over year to $25.7 billion, vs. estimates for $25.74 billion

Gross profit margin: 27.2% vs. 27.4% a year ago, vs. estimates for 28.7%

Diluted EPS: down 11.9% year over year to $1.85, vs. estimates for $2.30 (guidance: $2.20 to $2.40)

Comparable sales: up 0.3% year over year, vs. 1.48% estimate (last year comparable sales fell 4.9%; Walmart US reported a 5.3% gain in the third quarter of 2024)

Digital comparable sales: up 10.8%

Store comparable sales: down 1.9%

What else caught our attention

Inventory grew at a faster pace than sales, up 3% from the prior year.

The company repurchased $354 million of its stock in the quarter. $9.2 billion remains available to repurchase under a prior authorization.

The number of transactions rose 2.4% in the quarter, while the average transaction amount dropped by 2%.

Target ended the quarter with about $3.4 billion in cash.

Fourth quarter earnings per share are projected to be $1.85 to $2.45, compared to estimates of $2.65.

Comparable sales for the quarter are projected to be unchanged versus estimates for them to be up 1.5%.

Full-year earnings per share are projected to be $8.30 to $8.90 (previous: $9 to $9.70), compared to estimates for $9.61.