Target Corp. (TGT - Get Report) is finally on the path for recovery but shares dropped in premarket trading after the retailer holiday forecast underwhelmed. 

The big box retailer beat Wall Street expectations in its third quarter earnings, reporting 91 cents per share and total sales revenue of $16.67 billion, versus analyst predictions of 86 cents and $16.61 billion.

Target saw its comp sales grow by 0.9%, higher than the Street's forecast of 0.4%. E-commerce saw even greater growth at 24%. The Minneapolis-based retailer raised its full-year earnings guidance to between $4.40 and $4.60 from between $4.35 and $4.50, after the better-than-expected results.

However, Target shares were marked 5.31% lower in premarket trading, indicated to open at $56.90, after retailer underwhelmed in its predictions for the following quarter, forecasting earnings of between $1.05 and $1.25 per share. Analysts had been expecting an EPS guidance with a midpoint of $1.24.

"We're very pleased with Target's third quarter performance, including traffic and sales growth that demonstrate we're building on the progress we saw in the first half of the year," CEO Brian Cornell said in a statement.

"The investments we're making in our business will help Target drive long-term success and ensure we're well positioned to deliver for guests in the all-important holiday season."

Target's stock lost 20% of its value so far this year as it struggled to compete with the likes of Wal-Mart Stores Inc. (WMT - Get Report) and Amazon.com Inc. (AMZN - Get Report) . About 99% of Americans live within 10 miles of a Walmart, for instance, which can deliver to 87% of Americans with next-day ground shipping and 99% with two-day shipping.

Target's quarter leaves Wall Street wondering.
Target's quarter leaves Wall Street wondering.

But in February, Target announced a $7 billion investment plan, and is just now beginning to reap the rewards.

"All the things we're planning and testing, they're coming to life across the country," Cornell said at a Target Herald Square opening last month in New York City. He told reporters that remodeling Target stores will be a major component of the investment plan. By 2020, he said, 1,000 Target stores will have been remodeled.

The Minneapolis-based retailer is also rolling out same-day delivery services. By Oct. 20, four Targets in New York City will offer same-day delivery. From its pilot program in the TriBeCa store, Target found that the average customer shopping basket is six times bigger. It will expand its next-day day service called Target Restock, which is currently available in 11 markets-including New York and Los Angeles, but will expand in 2018.

Target's digital innovations include adding new features to its website, such as a 360-degree images to showcase furniture products. Target is also expanding its partnership with Alphabet Inc.'s (GOOGL - Get Report) Google, to add voice-activated shopping and two-day delivery.

To boost sales the fourth quarter, Target will offering customers a line of services that make shopping more convenient as well as increasing spending on marketing, such as a mobile wallet function for loyalty card holders and free shipping on its website.

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