Target in Trouble after Stock Drops 21%, and Christmas Shoppers May Not Help

Major US retailer Target (TGT) is feeling the impact of a less than stellar quarterly earnings report as its stock price fell 21% on Wednesday and could decline even further.

The company was not even optimistic about the holiday season when issuing its earnings report, saying that they expect flat earnings through the final quarter of the year. This has set off warnings throughout the retail industry and the stock market that retailers could be seeing one of the poorest holiday shopping seasons in a while.

In premarket trading on Thursday, Target’s prospects looked slightly better. There was a small 0.03% increase from the previous day, indicating that the decline may be over. We could see Target’s stock price recover slightly from Wednesday’s drop off, but probably not by much.

When Target posted its earnings report, it was the biggest diversion from the expected earnings since 2022. The company’s leadership blamed the issue on careful shoppers who are being very tight with their budgets and making more discerning decisions about where they shop and what they buy.

The Christmas Dilemma

If that kind of spending behavior continues into the holidays, then Target will just be one of the casualties. Typically, the holiday shopping season is when retailers see shoppers spend more freely and often go into serious debt. That helps to sustain the retailers and put some of them In the black when they have been in the red all year.

If careful shopping habits are developing ahead of the holiday season, though, then that could translate to continued careful shopping throughout November and December. That is good for savvy shoppers but bad for retailers like Target that are already struggling.

Now at a 52-week stock price low, the company’s stock performance will depend heavily on holiday traffic. If that is lighter than usual, then Target could start off 2025 in trouble. Already, the company has adjusted their expected earnings for the current quarter. They anticipate a flat earnings statement for the quarter. Years of high inflation is taking a cumulative toll on the industry, and consumers taking that into account could spell major changes for Target moving forward.