$Target (TGT.US)$ The stock price plummeted over 18% in pre-market trading on Wednesday. This came after the retailer lowered its full-year profit forecast, warning that sluggish quarterly sales and increased inventory have harmed profitability.

Data shows that Target's Q3 revenue was $25.67 billion, a year-on-year increase of 1.1%, below market expectations; Non-GAAP earnings per share were $1.85, also below market expectations.

Comparable sales in the third quarter only increased by 0.3%, falling short of analysts' expectations and slowing down from the previous quarter. Specifically, physical store comparable sales declined by 1.9%, while digital comparable sales grew by nearly 11%. The increase in online sales also brought higher fulfillment costs, leading to a decrease in operating margin.

Target currently expects full-year earnings per share to be between $8.30 and $8.90, lower than the previous range of $9.00 to $9.70.

Company executives stated that American consumers are reducing spending on non-essential items such as apparel and housewares.

Target's profits have also been affected as the company accumulated more products in response to last month's port strike in the USA. The cost of holding additional inventory exceeded the company's expectations, thereby eroding earnings.

Target CEO Brian Cornell tried to downplay the impact of negative performance on the conference call, pointing out that issues like port strikes are one-time problems, and the preliminary data for holiday sales are positive. He stated that the company is working hard to address soft demand and offset rising costs, but the decision to stockpile goods before the port strikes was correct in case the strikes last longer than expected.

Cornell said: "We have no regrets about these actions."

Weak performance raises concerns.

Against the backdrop of high interest rates and inflation, Target had previously announced a series of weak performances, but in the second quarter, the company achieved some success in increasing sales and foot traffic through promotions like price cuts.

Target executives stated that the holiday sales season started well, and the recent softness in the last quarter was due to the port strikes and other challenges they do not expect to recur.

Target stated that American consumers are buying innovative and affordable products, especially beauty and fragrance items. Food and beverage sales grew in the third quarter. The company mentioned that due to recent price cuts, foot traffic increased by 2.4% in the third quarter.

Target's Chief Business Officer Rick Gomez stated in the conference call: "Consumers are becoming increasingly savvy and strategic in their shopping." He mentioned that shoppers are "willing to hunt down" special deals and "they will wait for the right moment."

Unlike Target, $Walmart (WMT.US)$On Tuesday, it raised the full-year performance forecast. Walmart stated that consumer spending remains stable, and prices for most commodities have not increased, except for groceries. Walmart also indicated that sales of outfits and other housewares grew only in the low single digits in the third quarter, as the company seeks to expand its online product offerings.

So far this fiscal quarter, other major retailers have also reported better-than-expected performance, although some companies' results were affected by the weather, such as $Home Depot (HD.US)$and $Lowe's Companies (LOW.US)$ Raised the full-year performance expectations due to hurricanes and warm weather boosting spending on home improvement products. However, both companies indicated that consumers are taking a cautious approach to big expenses due to high interest rates and mortgage rates.

On Wednesday during pre-market trading, Target's stock price plummeted, dragging down the retail sector in the USA.$Dollar General (DG.US)$fell nearly 4%,$Nordstrom (JWN.US)$、$Dollar Tree (DLTR.US)$Fell by nearly 3%.$Kohl's Corp (KSS.US)$Fell nearly 2%.$Macy's (M.US)$Fell more than 1%, $Walmart (WMT.US)$ Dropped by nearly 1%.

Vital Knowledge analyst Adam Crisafulli stated in a report: "Target's weak performance highlights that a large part of Walmart's momentum comes from market share growth. Consumers may be 'resilient,' but they are still very selective and thrifty. Target's poor performance may not bode well for companies like Kohl's Corp, Dollar General, and Dollar Tree."

Editor/rice