What happened

Shares of Target (TGT -1.01%) were down 13.7% as of 10:39 a.m. ET on Wednesday after the retailer reported a disappointing quarter. While revenue slightly beat Wall Street's expectations, earnings per share widely missed the consensus estimate. 

Moreover, the company guided for a wider range of outcomes for the holiday quarter than expected, which weighed on the stock. Year to date, shares have fallen 32% over weakening sales and margins.  

So what

While the company delivered growth in comparable-store sales (comps) and gained market share across merchandise categories, management reported softening sales trends toward the end of the quarter. 

Target is being impacted by many things out of its control. First, inflation and rising interest rates are straining the spending power of its customers. Management also blamed "a significant increase in theft and organized retail crime" across its business. 

However, some of these issues are impacting Target worse than other retailers, which is likely contributing to the stock's sell-off today. For example, Lowe's delivered better-than-expected earnings results and guidance. Even Target's direct competitor, Walmart, raised its guidance after gaining market share in groceries.  

Now what

Management's guidance calls for comps to decline in the low-single-digit range in the holiday quarter, consistent with the sales trends through the early part of November.

On the bright side, CEO Brian Cornell pointed out that the company has a strong balance sheet that will allow for continued investment in growth initiatives when many other retailers have to cut back. This financial strength should also continue to support Target's 50-year record of dividend increases, with the stock's recent decline having brought the dividend yield up to 2.5%.