Target's third-quarter sales and profit fell below expectations after a short dockworker strike in early October.
The big box retailer reported Wednesday a net income of $854 million ($1.85 per share) in the third quarter. This number fell short of the $2.30 per share that analysts predicted, according to FactSet.
Target's 2024 third-quarter profit is down from $971 million ($2.10 per share) seen in the third quarter of 2023.
Meanwhile, sales climbed to $25.67 billion, which is up from $25.4 billion last year. However, these sales still fell short of Wall Street expectations.
On the plus side, Target saw its customer traffic increase 2.4 percent in the third quarter, which company executives said translates to 10 million more sales transactions from a year prior. Additionally, digital comparable sales increased 10.8 percent.
Dockworker Strike
One of the factors that contributed to Target missing expectations was the dockworkers' strike that started October 1 and was suspended on October 3.
U.S. ports from Maine to Texas shut down for that three-day period last month as the union representing roughly 45,000 dockworkers went on strike for significantly higher wages and a total ban on the automation of cranes, gates and container-moving trucks. It was the first time the International Longshoremen's Association went on strike since 1977.
A deal was quickly reached to suspend the strike until January 15, giving time to negotiate a new contract between the dockworkers and the ports and shipping companies. There was a tentative agreement on wages in the meantime.
Target cited the strike as a reason for the less-than-expected third-quarter profit. Company executives said that Target had to reroute some merchandise when the dockworkers went on strike, which increased operating costs and cut into profit margins.
Inflation-weary customers are also cutting back on discretionary spending while shopping the sales on necessities.
"They're being very patient, shopping for promos, looking for great value on those essential items that they need for their pantry," Target Chairman and CEO Brian Cornell said on a call with reporters. "And they're shopping very conservatively and have been in discretionary categories throughout the year."
Target's Outlook for the Holiday Season
The retailer now predicts its earnings per share to be around $1.85 to $2.45 for its fourth quarter. This is below the $2.65 per share that analysts polled by FactSet expected.
How Do Walmart and Amazon Compare?
While Target missed the mark this quarter, Walmart reported better-than-expected third-quarter sales on Tuesday. The big box retailer reported a net income of $4.58 billion (57 cents per share). Meanwhile, Amazon reported late last month that it earned $15.3 billion ($1.43 per share) in its third quarter, exceeding analysts' expectations.
This article includes reporting from The Associated Press.
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