Target slips 7% after a weak holiday season forces it to slash sales forecast by more than half

• Target reported holiday sales Wednesday that missed Wall Street's expectations. The retailer also cut its fiscal fourth quarter 2019 same-store sales estimate.
• Shares fell as much as 7% in early trading Wednesday.
• Weakness in electronics, toys, and portions of home drove the less-than-stellar holiday sales results, Target said in a press release.
• Watch Target trade live on Markets Insider.

Shares of Target fell by as much as 7% in early trading Wednesday after the retailer reported that its holiday sales were much lower than Wall Street expected. The company also lowered its guidance for sales going forward.

Target's same-store sales in November and December grew only 1.4%, much lower than the 5.7% growth in the same period last year and below the 3.8% estimate from Wall Street analysts. The less-than-stellar sales were driven by weakness in electronics, toys, and portions of home, which are key merchandise areas for Target.

Target's weak holiday sales numbers come amid dismal results from similar stores, including Kohl's, JCPenney, and Macy's, and underscore an increasingly tough backdrop for retailers. The results also foreshadow more potential pain ahead - shares of Walmart, which reports holiday sales next month, traded down as much as 2.4% Wednesday.

"We faced challenges throughout November and December in key seasonal merchandise categories and our holiday sales did not meet our expectations," Brian Cornell, CEO of Target, said in a press release.

After the performance, Target lowered its expectations for same-store sales in the next quarter. The retailer now expects fiscal fourth quarter 2019 comparable sales growth in line with the 1.4% performance seen in November and December, a decrease from previous estimates of 3% to 4% growth.

The lowered sales guidance would translate into full-year comparable sales growth of more than 3%, Target said.

Cornell went on to say that despite the weak third quarter and lowered sales outlook for the fourth quarter, Target is maintaining its fourth-quarter estimate for adjusted earnings per share between $1.54 and $1.74.

"We also remain on track to deliver historically strong full-year results in 2019, including comparable sales growth of more than 3 percent and record-high EPS reflecting mid-teens growth compared with last year," he said.

There were some bright spots in the holiday sales report. Sales in apparel and beauty, also key merchandise areas for Target, were strong, the company said. Digital sales grew 19% as more people used the company's same-day options such as curbside pickup. Overall, Target said that use of its same-day services grew more than 50% in the period compared to a year earlier.

Wall Street is largely bullish on Target. The retailer has a consensus price target of $136.48 and 19 "buy" ratings, nine "hold" ratings, and one "sell" rating, according to Bloomberg data.

Target has shed 2.3% year-to-date through Wednesday's close.