Minneapolis-based Target cut its full-year forecast and reported slumping profits and flat comparable sales growth of 0.2 percent over last year, lower than Wall Street analysts expected. Shares of Target dropped almost 22 percent by midday Wednesday.

The company reduced its annual earnings forecast by about 8 percent even as it heads into the busiest shopping season of the year. Target thrives on shoppers making impulse purchases in discretionary categories such as home, apparel and sporting goods, but the company warned consumers are still feeling pressure on their wallets and are seeking out sales and value.

“The current consumer mood is one that is not aligned in Target’s favor,” Neil Saunders, a managing director of GlobalData, said in an analyst note.

Target’s news also comes on the heels of glowing quarterly results from its fiercest competitor. While Walmart has edged out Target over the past few years thanks to its lower prices, its recent quarterly results showed a stark shift in priorities for consumers of all income levels. The Bentonville, Arkansas-based retailer, which raised its full-year outlook Tuesday, noted shoppers from households earning more than $100,000 made up 75 percent of its market share gains in the third quarter. Walmart said it was seeing positive results in its discretionary categories, suggesting that consumers who may have once browsed those aisles at Target are now trading-down at Walmart.

Walmart also has an edge over Target in the grocery category as consumers battle high grocery prices. In addition to Target having a more limited selection at most stores than Walmart, it also can’t compete on price. The company announced in May that it was lowering prices on 5,000 items, including food and household staples. Target said Wednesday that by the end of the year, it will have cut prices on over 10,000 items.

Same-store sales for Target fell 1.9 percent in the third quarter compared to the same period last year. Total revenue was $25.7 billion, about 1.1 percent higher than 2023, and total sales increased just 0.9 percent. Target chief executive Brian Cornell said Wednesday that the results show that consumers are “shopping carefully as they work to overcome the cumulative impact of multiple years of price inflation.”

Target chief commercial officer Rick Gomez said in an earnings call Wednesday that consumers have become more “resourceful” and deals-focused. For example, Gomez said, sales dipped leading up to the Target Circle week in October that starts the retailer’s holiday shopping push and fell again after.