Target Corp. (NYSE: TGT) reported a 47 percent drop in third-quarter earnings Thursday, Nov. 21, largely the result of the company's foray into Canada.
The Minneapolis-based retailer said net income fell to $341 million, or 54 cents a share, compared with earnings of $637 million, or 97 cents a share, for the same quarter last year. Analysts expected earnings of 64 cents per share.
Third-quarter U.S. revenue increased 2 percent to $16.9 billion, lower than Wall Street's estimate of $17.26 billion. Comp-store sales, for locations open at least a year, rose 0.9 percent, near the low end of Target's expectations.
Target, the nation's second-largest retailer by sales behind Walmart (NYSE: WMT), said it hit a few hurdles as it was expanding into Canada, where it opened 23 stores during the third quarter. The retailer saw lower-than-expected Canadian sales of $333 million as it aimed to clear excess inventory and reduce operating costs. Excluding Canadian-related costs and other items, Target earned 84 cents per share during the third quarter.
CEO Gregg Steinhafel said Target's U.S. segment performed well despite the fact that "consumer spending remains strained." With the holiday shopping season underway, the company is hopeful that earlier promotions will boost revenue. Target is among a handful of retailers that plan to open their doors on Thanksgiving in hopes of getting a head start on Black Friday sales.
Target cut its earnings guidance for the year to between $4.59 and $4.69 a share, down from its previous estimate of $4.70 to $4.90 a share.
Shares fell 4.8 percent, or $2.71, to $63.77 in early trading Thursday.
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