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Target’s chief executive has insisted the US retailer has the “right strategy” even as the company lowered profit guidance and warned of faltering sales growth during the important holiday season.

Executives pointed to weakness in sales of items beyond essentials, such as groceries, and cost pressures as the company lowered profit guidance for the current fiscal year, reversing a rise to the outlook made in August.

The chain expects profits of between $1.85 and $2.45 per share in the current quarter, well below the $2.66 expected by Wall Street analysts. Sales would be flat in the period, Target said.

Target shares were down 22 per cent in early trading on Wednesday, dragging down those of rivals such as Dollar Tree and Dollar General.

Executives said sales of clothing declined in the third quarter as unseasonably warm weather damped demand for winter clothes. Sales also softened for home decor and a category that includes electronics and toys.

“As we sit here today, we’re confident we have the right assets, the right strategy and the right team in place to attain our strategic and financial goals,” Brian Cornell, chief executive, told analysts.

Third-quarter profit fell 12 per cent to $854mn. Analysts surveyed by Visible Alpha had expected earnings of more than $1bn.

Target’s results were also hit by a shortlived US dockworkers’ strike. The International Longshoremen’s Association walked out for three days in early October, freezing container ports from Maine to Texas. The strike ended when negotiators agreed to temporarily extend the union’s contract with shipping lines until January 15.

Michael Fiddelke, Target’s chief operating officer, said the company had brought in some products sooner than usual in anticipation of the strike to ensure they would be available for the holiday shopping season.

“When we take in product early, that means we hold it a bit longer, we usually touch it a bit more. That comes at a cost, both in our distribution centres and our store back rooms,” he said.

Target’s comparable sales rose 0.3 per cent in the third quarter, below estimates of a 1.4 per cent gain. Sales from stores open for at least a year declined 1.9 per cent, even as comparable digital sales rose 10.8 per cent.

The results stood in contrast with some other US retailers. Off-price chain TJX on Wednesday reported that comparable store sales had risen 3 per cent and maintained its outlook for a similar rise in the current quarter.

Walmart, Target’s biggest competitor, blew past estimates, with US comparable sales growth of 5.3 per cent when it reported results on Tuesday.

Walmart’s chief executive Doug McMillon said the financial impact of the port strike and the two hurricanes that devastated parts of the US south in September and October had been relatively modest.

Target ended the third quarter on November 2 with $15.2bn in inventory, up 2.9 per cent from a year ago.

“I think we have the appropriate approach for the holiday season. Based on some of the trends we are seeing year to date, we are guiding with some conservatism, hoping there will be some upside as we get into the season,” Cornell said in a media briefing.

Target has said it will cut the prices of more than 2,000 items during the holiday shopping season, including food and essentials as well as gifts.

Similar discounts on thousands of items this year helped revive sales growth after a slump that lasted more than a year following negative reactions to Target’s Pride Month displays in 2023.

In its latest quarter, Target said the number of transactions had risen 2.4 per cent from a year before but customers paid 2 per cent less per transaction. Revenue rose 1.1 per cent to $25.7bn in the quarter, slightly less than estimates.

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