Target (TGT -0.88%) shares nearly doubled in 2019 as investors cheered good news on both the sales and profitability fronts. Not only did the retailer achieve some of its fastest customer traffic growth in over a decade, but it returned to margin expansion as customers enthusiastically paid up for convenient ultra-fast fulfillment offerings like same-day delivery.

Yet investors' mood soured on the stock in recent weeks after Target warned that its holiday-quarter results will include a sharp growth slowdown. On Tuesday, we'll find out some key details about that slump, including whether management thinks it will carry over into early 2020. Let's take a closer look.

Exterior of a Target store

Image source: Target.

Growth details

Thanks to its mid-January update, we already know that comparable-store sales growth likely slowed to around 1.4%, or less than half the rate that Target managed through the rest of 2019. Executives at the time said that seasonal categories like toys and video games were hit especially hard, and those comments were echoed by Walmart (WMT 1.85%) in late February when it announced its own growth slowdown.

This week's report will show the scale of Target's stumble, with a few positive factors offsetting the broader decline. Those include increasing customer traffic and market-share gains in areas like beauty products and apparel. Look for CEO Chris Cornell and his team to highlight wins like those, along with the full-year 2019 picture that likely includes Target's best expansion rate in years.

Profit updates

Target is still expected to hit management's profit outlook, which calls for adjusted earnings of between $1.54 per share and $1.74 per share for the quarter and as much as $6.45 per share for the full year. Two big factors are supporting that profit haul despite the surprise growth slowdown.

First, Target entered the holiday season with a light inventory holding, and so likely didn't need to resort to excessive price cutting to keep products moving off the shelves. Second, the retailer is still seeing impressive growth from its quick fulfillment methods, with same-day deliver and pickup services growing 50% year over year. Customers are paying higher prices for these convenient options, and that will show up in healthy gross and operating profit margins.

A new outlook

Target will issue its first official 2020 outlook in this report, and a lot is riding on what the consumer retailer says about the next few quarters. Walmart predicted a quick return to faster growth a few weeks ago, and if Target follows suit, then investors can celebrate the likelihood that last quarter's drop was just a temporary interruption in a wider expansion story.

The earnings outlook is another wild card. Operating margin is on pace to increase in 2019 for the first time since Target started its multichannel transformation over two years ago.

The chain might predict another uptick in 2020, or it could warn, as Walmart did, that the shift toward e-commerce fulfillment and upgraded stores will continue requiring an elevated amount of capital spending and pressure earnings growth for at least another year.