Sales at the Minneapolis-based retailer increased in the most recent quarter as shoppers spent more on food and groceries and even luggage as they prepared to travel again, but supply-chain costs and inflationary pressures cut into profits. Like Walmart Inc., its larger rival, Target reported quarterly earnings that missed Wall Street’s forecasts.

Target shares fell nearly 25% to about $163 in premarket trading Wednesday on the results.

Target management said fuel and freight costs will be $1 billion higher this year than it had expected, with little sign of their easing throughout 2022. The company said it would try not to pass those cost increases to consumers through higher prices for its goods, trading short-term profit for what it hopes will be longer-term market-share gains.

Target Squeezed by Inflation and Fuel Costs – WSJ