Target Corp (NYSE:TGT) shares are trading significantly lower Wednesday after the company announced worse-than-expected earnings results and reported an unexpected drop in operating income margin rate.

Target said first-quarter revenue increased 4% year-over-year to $25.17 billion, which beat the $24.37-billion estimate, according to data from Benzinga Pro. The company reported quarterly earnings of $2.19 per share, which came in below the estimate of $3.07 per share. 

Comparable sales grew 3.3% year-over-year, reflecting traffic growth of 3.9%. Same-day services grew 8% year-over-year.

Operating income margin rate came in well below expectations at 5.3% in the first quarter compared with 9.8% in 2021. The company said it was primarily driven by gross margin pressure reflecting actions to reduce excess inventory as well as higher freight and transportation costs.

"Throughout the quarter, we faced unexpectedly high costs, driven by a number of factors, resulting in profitability that came in well below our expectations, and well below where we expect to operate over time," said Brian Cornell, chairman and CEO of Target.

For the second quarter, the company expects its operating income margin rate to be in a wide range centered around the first quarter's operating margin rate of 5.3%. Target said it continues to expect low to mid single-digit revenue growth for full-year 2022.

See Also: 20 Stocks Moving in Wednesday's Pre-Market Session

TGT Price Action: Target shares are making new 52-week lows on Wednesday. 

The stock was down 23.6% at $164.58 at press time.

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Photo: courtesy of Target.