By Anne D’Innocenzio
AP Retail Writer
NEW YORK (AP) — Target Corp.’s third-quarter profit dropped 47 percent, stung by a double whammy: a pullback from U.S. shoppers and costs related to its expansion into Canada
Target, based in Minneapolis, also lowered its full-year earnings forecast on Thursday. The results raise concerns about the key holiday season, which can account for anywhere from 20 percent to 40 percent of a retailer’s annual revenue, revs up.
Several other big retailers including Wal-Mart Stores Inc. and Kohl’s Corp. have cut their outlooks as their middle- and lower-income shoppers remain cautious in an uncertain economy.
Dollar Tree Inc., which sells goods for a dollar or less, on Thursday reported Thursday a 19 percent drop in third-quarter net income and offered a disappointing outlook for the holiday quarter.
Aside from the old worries like stagnant wages, shoppers are dealing with issues like a 2 percentage-point increase in the Social Security payroll tax since Jan. 1. Target also noted that a 16-day partial government shutdown in October also caused shoppers to pull back.
Given this tough environment, Target is touting prices on products in holiday TV ads, the first time it has done so in at least a decade.
For the three months that ended Nov. 2, Target earned $341 million, or 54 cents per share. That’s down from $637 million, or 96 cents per share, a year earlier.
Removing Canada-related expansion costs and other items, earnings were 84 cents per share. Analysts expected earnings of 64 cents per share for the Minneapolis company.
Revenue rose 2 percent to $17.26 billion from $16.93 billion. Wall Street expected $17.38 billion in revenue.