Target executives blamed factors from hurricanes to the port strike for the company’s disappointing sales this fall. But even among competitors facing the same challenges, the company has underperformed. 

Target’s net income fell 12% in the third quarter compared to the previous year, landing at $854 million and widely missing estimates. Earnings per share dropped 11.9%, and the company lowered its guidance for the rest of the year. Target’s stock price fell 21% after the results. 

“We’re not happy with where we are,” CEO Brian Cornell said on a call with analysts, discussing Target’s sales challenges. ”We want to get these businesses to grow.”

Target relies heavily on sales of discretionary goods, from clothing to home decor, which customers often cut back on when times are tough. That has throttled the company’s sales over much of the last year, but some analysts are now suggesting operational issues are also a factor at the Minneapolis-based retailer.

“There's an economic headwind for them, I don't doubt it, but pretty much everyone's facing that,” said Scott Mushkin, CEO of R5 Capital. “I do think there's more in the company's control than they're thinking.”

This quarter, Cornell said the short-lived port strike cut into profits because the company overstocked to prepare and paid more to re-route some products. He also noted brief store closures for hurricanes in North Carolina and Florida and unseasonably warm weather across the U.S., which cut into sales of fall clothing. 

Yet competitors including Walmart, Costco, and TJMaxx faced the same challenges and still turned out healthy profits that exceeded expectations. 

Walmart, the nation’s largest retailer, posted an increase in sales of 5.5%, including gains in general merchandise, and attracted more high-income shoppers, possibly luring them from Target. Costco also saw gains in discretionary goods sales, especially toys and lawn care items, while TJ Maxx increased sales in clothing and home goods. 

Joe Feldman, an analyst at Telsey Advisory Group, said there are pockets of “improving trends and it feels like Target took a breather there.” 

A key metric, store traffic, may hold some clues. Target’s store traffic was up by 2.4% this quarter, even as sales fell. 

That indicates that customers might not have liked what they found when they got in the store. 

Mushkin said he’s surveyed dozens of Target stores and found the store execution wasn’t up to standard: displays were messy or late to get set up, items needed to be restocked, and even when items were on the racks, not all of the sizes and varieties were available. 

“What they're doing as far as store execution goes, they seem oblivious to this,” Mushkin said. 

Yet on the earnings call, company executives said they would double down on the “Target experience” and pointed to high-profile partnerships with Taylor Swift, Blake Lively, and Wicked the movie as key to lifting sales over the holidays. 

The holiday season itself presents additional challenges to Target: the 2024 calendar has five fewer shopping days between Thanksgiving and Christmas. The company’s fiscal year also ends a week sooner than it did last year, shaving a week of potential sales off the books. 

Those pressures along with the strength of competitors may make for a blue Christmas at Target. 

“Between Amazon and Walmart, do you really need anybody else?” Mushkin said.