CNBC's Courtney Reagan joins 'Squawk Box' to report on the company's quarterly earnings results.

Target released its third quarter financial results, reporting adjusted earnings of $1.78 per share and revenue of $25.27 billion, both slightly missing analyst expectations. The company lowered its full-year earnings guidance to $7-$8 per share, down from a previous range of $7-$9, as comparable sales fell 2.7% for the third consecutive quarter.

Incoming CEO Michael Fidelke noted ongoing volatility in consumer behavior, with shoppers prioritizing essential purchases and seeking value. Target also announced a 25% increase in capital expenditures for next year and introduced a pilot program with OpenAI to offer personalized gift recommendations through its app.

Target cuts profit outlook as shoppers look for deals

Target out with third quarter results. Courtney Reagan joins us now with more on that. Good morning. Hi, good morning, Andrew. So Target is reporting adjusted earnings of $1.78 for its third quarter. It's not clear, though, if this is comparable to consensus because there's two new charges for severance and impairment. Revenues are lighter than consensus, though, $25.27 billion compared to $25.32 billion. Target is lowering its high end of the full year earnings guidance with just a quarter left. So it's now expecting $7 to $8 a share. That's down from $7 to $9. Consensus is $7.28. But again, also unclear if that's comparable because of what's happening here in the third quarter. Comparable sales, however, that's a more clear miss, falling 2.7% versus 2.7 or 2.1%, excuse me, estimates. It is a third straight drop in that metric. It's dragged down by store sales, traffic and ticket, both down 2.2 and 0.5% respectively. No comparable digital sales. Those are up 2.4%, gross margin coming in at 28.2%. That is a slight miss. And in a call with reporters, incoming CEO Michael Fidelke said, we are far from satisfied with our current results and explain the lower guidance is based on our best assessment of where we exited Q3. We saw some shopping, some choppiness rather, month by month in the quarter. And we learned that over time, in times of volatility, it is best for us to be positioned cautiously. Now, he reiterated his key areas of focus when he takes over and said Target will ramp up CapEx spending by 25% to $5 billion next year. Rick Gomez, he's Target's chief commercial officer, he said discretionary areas were soft, food and beverage stronger, apparel overall down 5%, but denim comps grew within the category. Toys were up 10%. He also discussed a consumer that remains, Joe, choiceful and is looking to stretch their budgets. He did multiple times. He said choiceful. The consumer looking to stretch the budgets. And he also said, we think the consumer will prioritize what goes under the tree versus what goes on the tree this holiday season. So not a great quarter. We know there is going to be a CEO succession that happens at the end of the fiscal year, which is February 1st. So look, if you're a Target, maybe you sort of get everything out that you can. That's not so great. Clear the decks. Get a good restart. I think expectations were relatively low going into that. Still, we see shares down about 3%. Whether you whether you can directly compare earnings per share, one way, what you can't mess around with is revenue. That's all very clear. That's a very but nothing awful. I mean, that was a slight miss on the overall on the overall book, comps down to that's six tenths. Yeah, it is what it is. But it's not, you know, at the end, it's no worse than it's been at Target recently. That's true. One other thing that the target is announcing today is this pilot program with OpenAI. And so in chat GPT, there's a way that you access the target app and you say, hey, target, I'm interested in looking for the perfect gift for my mother in law. She likes the color red coffee, chocolate and cozy surprises. And then it will pull up some recommendations for you and you can buy it right through the app. So that's another thing they're trying is technology is one of those three growth pillars that the CEO wants to focus on. Hopefully, it doesn't after you decide what you want, it doesn't say, oh, we don't have that. Yeah, that's very true. Managing a retailer. There's a lot that goes that can't even imagine. Everyone thinks it's a simple business because everyone shops. But imagine trying to figure out what everybody wants, have it in stock in the right place at the right price. Right. Exactly. Without shrinkage or leakage. Don't want that. Either one of those things. If I was choiceful, I don't know which I'd choose.

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