Here are some highlights of Target`s third quarter results: Target Corp. TGT announced its third quarter results this morning. A day after Walmart Inc.`s strong performance, the Minneapolis-based retailer`s metrics looked anemic. Brian Cornell, president and CEO of Target, said consumers were dominating their spending, as feared in late October and early November, and noted a significant shift in customer spending habits as shoppers grappled with persistent inflation and broader economic issues. Target`s quarterly profit fell short of forecasts and the company`s revenue growth was lower than rival Walmart Inc. during that period. Target executives lowered their financial targets for the holiday quarter, saying they were willing to offer deep discounts in the coming months to weed out unwanted inventory and attract shoppers. For the fourth quarter, the company expects same-store sales to decline in the low single-digit range with an operating margin of approximately 3%. Consumers are cutting vacation spending at Target, the retailer said on its conference call with. [+] Wall Street. “In the final weeks of the quarter, revenue and earnings trends weakened significantly as customer buying behavior was increasingly impacted by inflation, rising interest rates and economic uncertainty,” said Brian Cornell, president and CEO of Target.

“This resulted in third-quarter earnings well below our expectations. Retailer`s net interest expense was $125 million in the third quarter of 2022, compared to $105 million a year earlier, due to higher average long-term debt and commercial paper. The effective tax rate in the third quarter of 2022 was 21.6 percent, up from 22.1 percent a year ago, reflecting the impact of tax benefits on pre-tax profits lower than a year earlier, Target said. Many Target customers have started relying on credit cards or diving into their savings to shop, Christina Hennington, the company`s chief growth officer, told analysts on Wednesday. www.wsj.com/articles/target-tgt-q3-earnings-report-2023-11668561739 What has become clear is that U.S. consumer spending is changing, with many resorting to cheaper options and stores where they believe they can save money. This was evident at Walmart, which reported a better-than-expected result on Tuesday. One factor: More than 50% of Walmart`s U.S. business comes from food; this figure is 20% for Target. With inflation everywhere, households take care of needs such as food and shelter first. Wall Street shouldn`t have been too surprised.

Ahead of this morning`s conference call with analysts, Wall Street forecasters said Target would likely see a mixed bag, with earnings above expectations but earnings below expectations. Cornell said that in today`s challenging environment, the fact that Target is able to gain market share bodes well for the company in the long run. Cornell said the growing stress caused by rising inflation rates and uncertainty surrounding the economy are responsible for consumers` withdrawal. In addition, gross margin was impacted by higher compensation and headcount at Target`s distribution centers, as well as the cost of managing early inventory inflows, slightly offset by favorable category mix. Adjusted earnings per share came in at $1.54, well below analysts` estimates of $2.17. The operating profit margin was 3.9%, missing estimates by 5.35%. The company says margins are “well below expectations.” Target Corp. said consumers had cut spending in recent weeks, weakened sales and profits in the last quarter and cast a cloud over the holiday season. Click here for the latest trending stock tickers from the Yahoo Finance platform Retailers have been caught off guard by the rapid shift of pandemic-related spending in areas such as TVs and kitchen appliances to dinners, movies, and vacations. Now, inflation has created less room for a new flat panel or smart mixer.

Kohl`s and Macy`s report quarterly results Thursday that should provide a better insight into the mood of U.S. consumers. Target saw share gains in all five major merchandising categories. Operating margin in the third quarter improved significantly compared to the second quarter, but it is well below expectations. Faced with an increasingly challenging environment, Target lowered its revenue and earnings forecast for the fourth quarter. Cornell expects this trend to continue through the holidays. Target reported quarterly net income of $712 million, or $1.54 per share. This compares to $1.49 billion, or $3.04 per share, in the same period last year. Analysts had expected $2.16 per share last quarter, according to FactSet. The operating margin ratio for the third quarter was 3.9% in 2022, compared to 7.8% in 2021. Gross margin was 24.7% in the third quarter, compared to 28% in 2021. This year`s gross margin reflects higher markdowns, lower inventories and year-over-year costs of goods and freight, net of retail price increases.

In addition to stores, Target will invest in technology to continue offering popular services such as “It`s an environment where consumers are stressed,” Target`s Cornell said. “We know they spend more money on food, drinks and household utensils. And since they buy according to discretionary categories. They are looking for this big deal. Target said theft is a growing problem, with the number of thefts up 50% since the beginning of the year. Same-store sales increased 2.7%, slightly above the 2.51% growth estimate. Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn and YouTube Lowe`s and Home Depot both posted higher sales in the third quarter as buyers continued to spend on residential projects. T.J. Maxx`s parent company reported strong results Wednesday, noting that the “scavenger hunt” for bargains resonates with customers.

Read the latest financial and economic news from Yahoo Finance It wasn`t enough for Wall Street. Cornell was asked about CapX for 2023, which will pay in part to open 23 stores, including its 150,000-square-foot steroid store concept, which recently bowed out in Houston.