Goal missed the mark on its latest quarterly earnings expectations. 

The Minneapolis-based retailer reported earnings Wednesday before the market opened, revealing quarterly profits that were nearly cut in half because the firm continues to work through excess inventory issues and battles inflationary pressures. The corporate lowered its fourth quarter expectations because of this, causing its shares to fall by nearly 14 percent in pre-market hours. 

“Within the latter weeks of the quarter, sales and profit trends softened meaningfully, with guests’ shopping behavior increasingly impacted by inflation, rising rates of interest and economic uncertainty,” Brian Cornell, chairman and chief executive officer of Goal Corp., said in an announcement. “This resulted in a 3rd quarter profit performance well below our expectations. 

“While we’re able to deliver exceptional value for our guests this holiday season, supported by the decisive inventory actions we took earlier this 12 months, the rapidly evolving consumer environment means we’re planning the balance of the 12 months more conservatively,” Cornell continued. “We’re also taking latest actions to drive efficiencies now and in the long run, optimizing our operations to match the size of our business and drive continued growth. The strides we’ve got made lately to construct a really differentiated, guest-centered retail offering, punctuated by a balanced, multi-category portfolio, positions us well to navigate in any environment. Looking ahead, we remain laser-focused on delivering one of the best of Goal to our guests and continuing to speculate in our long-term, profitable growth.”

The corporate logged $712 million in profits throughout the three-month period ending Oct. 29, compared with $1.48 billion last 12 months. That’s on the heels of last quarter’s results, where Goal’s profits fell by nearly 90 percent due to rapidly-changing consumer preferences, which left the retailer with a glut of excess inventory.

In probably the most recent quarter, top-line results were barely more favorable with $26.5 billion in total revenues, compared with $25.6 billion a 12 months ago. Still, analysts were expecting closer to $26.38 billion in revenues. 

A number of vibrant spots throughout the quarter included comparable sales growth, which was up 2.7 percent, year-over-year, driven by a 1.4 percent increase in traffic and 1.3 percent increase in average ticket price, year-over-year. Comparable digital sales were up 0.3 percent throughout the quarter. 

Beauty, food and beverage and household essentials continued to be growth drivers, helping offset softness in discretionary items. 

Gross margin rate for the quarter was 24.7 percent, compared with 28 percent last 12 months, driven by higher markdown rates, inventory shrinkage, merchandise and freight costs, increased worker compensation costs and the associated fee of managing early inventory receipts. The corporate said a more favorable category mix and better prices helped offset a few of the pressure.   

Goal is now anticipating low-single digit declines in comparable sales throughout the holiday shopping season, with an operating margin rate centered around 3 percent.

The firm also said it plans to save lots of between $2 billion and $3 billion in the subsequent three years by being more efficient, even though it didn’t say how. 

“The corporate announced today it was undertaking an enterprise-wide effort to simplify and gain efficiencies across its business with a give attention to reducing complexities and lowering costs while continuing to support its team. These savings will support the corporate’s investments in driving deeper guest engagement and long-term growth while also delivering on its profit goals. This chance is enabled by the rapid growth since 2019, wherein Goal’s total revenue has grown roughly 40 percent. In light of this growth, this effort is targeted on fully leveraging the size that’s been gained to best-position the corporate to proceed growing efficiently over time.”

Goal ended the quarter with $954 million in money and money equivalents and $14.2 billion in long-term debt. The retailer has nearly 2,000 stores across the U.S. 

Goal’s quarterly earnings reveal comes just someday after Walmart revealed losses within the last three months, despite its top-line performance that caused the world’s largest retailer to boost guidance for the 12 months. Also just like Walmart, Goal has been on a multi-year journey to determine itself as a fashion destination. 

In September, Goal launched its 18th owned apparel brand called “Future Collective.” Ten of its owned brands are billion-dollar brands, including women’s activewear brand All in Motion. The retailer also revealed the newest design partners that very same month and said it will hire roughly 100,000 seasonal staff for the vacations, the identical number as last 12 months. 

Shares of Goal, which closed up 3.95 percent Tuesday to $178.98, are down nearly 33 percent, year-over-year.