Target Corp. shares slid more than 7 percent as its holiday shopping season began slower than expected, and it warned that fourth-quarter profits might fall well short of analyst predictions.
Target said the two days after Thanksgiving met its expectations, but the final week of November was soft in categories including toys, holiday merchandise, and home and apparel.
Same-store sales rose just 1.1 percent when adjusted for an unusual full week after Thanksgiving that landed in November.
Target said those trends would need to "meaningfully improve" if profits are to grow from last year's fourth quarter, when it made $1.29 per share. Analysts polled by Thomson Financial were expecting $1.33 per share for this year's fourth quarter.
Target's struggle for a larger fourth-quarter profit comes despite rising sales. Its overall sales rose 16.7 percent for November, and year-to-date sales rose 10 percent to $48.1 billion.
Target had warned that its fourth quarter would be soft, but investors seemed surprised, sending Target shares down $4.45, or 7.4 percent, to $55.68 in morning trading.
When it reported disappointing third quarter earnings on Nov. 20, Chief Financial Officer Doug Scovanner warned that earnings-per-share growth "will likely be quite modest compared to last year's result." Target shares touched a 52-week low of $50.25 that day, but had recovered to the high $50s since then as the holiday shopping season got under way.