Target falls as earnings beat but supply chain issues squeeze retail giant

• Target earnings beat Wall Street's estimates for the third quarter, and raised its forecast ahead of the holiday season.
• Shares fell as much as 5% Wednesday, as the retailer said it's focused on keeping customer prices down amid inflation.

Target shares dropped as much as 5% Wednesday following its strong third-quarter earnings report.

Shares of the company were trading at $252.14 as of 11:35 a.m. ET.

According to Target CEO Brian Cornell, the company has absorbed higher costs as it dials in on keeping prices down for customers. Protecting prices for shoppers is "as important to our guests this year as safety has been throughout the pandemic," Cornell said.

Revenue in the quarter came in at $25.65 billion, versus the expected $24.78 billion, and total revenue rose 13%, slightly above expectations. For earnings per share, Target reported $3.03 adjusted, beating the expected $2.83.

The retail giant is getting creative to make sure store items arrive on schedule despite transportation disruptions, according to Cornell. The company has even chartered its own vessels to mitigate supply-chain issues.

"We've made a big investment in both inventory and in staffing to make sure we are going to be there to provide the items the guest is looking for and great service," Cornell said.

Similar to Walmart, Target has proved it can shrug off the same supply-chain pressures that have hurt smaller competitors. Both big-box retailers have the scale and resources to keep business booming amid historic inflation.

The company raised its fourth-quarter forecast in anticipation of a strong holiday season for retail sales and a spike in customer demand. It now expects high single-digit to low double-digit percentage growth in comparable sales, up from the previous forecast of high single-digit sales growth.

Target expects its full-year operating income margin rate will be at or above 8%.