US retail stock investors, look away now.

Shares in Target tumbled by more than 14 per cent in pre-market trading on Tuesday after the department store operator issued fourth quarter earnings that came in at the low end of already reduced estimates and warned that full year earnings for 2017 could slump by as much as 24 per cent compared to 2016.

The retailer, which issued a profit warning last month following a dismal holiday performance, said it continues to struggle to get customers back into its stores, in the latest sign of the malaise that has engulfed the wider US retail sector.

As a result it said it expects like-for-like sales to drop by low-single digits for the 2017 fiscal year and is forecasting annual adjusted earnings to come in at between $3.80 to $4.20, down from the $5.01 it recorded in 2016.

The gloomy outlook comes as Target reported fourth quarter earnings that just met the lower end of its revised projections.

Like-for-like sales – a key industry metric – fell 1.5 per cent in the three months to end of January, and helped dragged overall sales for the year down 5.8 per cent to $69.5bn. Net earnings for the fourth quarter was $817m, or $1.45 per share.

Brian Cornell, Target chairman and chief executive, said:

Our fourth quarter results reflect the impact of rapidly-changing consumer behavior, which drove very strong digital growth but unexpected softness in our stores.

Mr Cornell added that he planned to give more details on his plans to revive sales – including the introduction of 12 new brands and a shift towards lower priced products – at an investor event in New York later this morning.

He said:

We will accelerate our investments in a smart network of physical and digital assets as well as our exclusive and differentiated assortment, including the launch of more than 12 new brands, representing more than $10 billion of our sales, over the next two years. In addition, we will invest in lower gross margins to ensure we are clearly and competitively priced every day. While the transition to this new model will present headwinds to our sales and profit performance in the short term, we are confident that these changes will best-position Target for continued success over the long term.

Shares in the company, already down 14.6 per cent over the past 12 months, were down a further 14.7 per cent in pre-market trading.

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