Shares of Target (TGT) dropped after the retailer lowered its earnings and comparable store sales forecasts for the fourth quarter after its holiday period sales were softer than expected.

HOLIDAY PERIOD SALES: Target said this morning that comparable sales for the November-December holiday period fell 1.3%, with total sales down 4.9% for the two month period. "While we were pleased with Black Friday sales, December digital sales growth of more than 40% and continued strength in our Signature Categories, these results were offset by early season sales softness and disappointing traffic and sales trends in our stores," Brian Cornell, chairman and CEO of Target, stated.

GUIDANCE: Target said it now expects Q4 same-store sales to fall 1%-1.5%, compared with its prior view of a 1% decline to an increase of 1%. Earnings per share guidance for the quarter was lowered to $1.45-$1.55 from $1.55-$1.75, well below analysts' consensus estimate of $1.65. The retailer also projected fiscal 2016 adjusted EPS of $5.00-$5.10, down from a previous range of $5.10-$5.30, compared to analysts' estimate of $5.20 per share for the year. "While we significantly outpaced the industry's digital performance, the costs associated with the accelerated mix shift between our stores and digital channels and a highly promotional competitive environment had a negative impact on our fourth quarter margins and EPS," Cornell said.

WHAT'S NOTABLE: Retailers like Target have been hurt by an in online shopping on sites like Amazon.com (AMZN) rather than at brick-and-mortar stores. Amazon said earlier this month that it had its "best ever" holiday season, and noted that it shipped more than 1B items worldwide.

ANALYST COMMENTARY: Following Target's statement, Oppenheimer said Wal-Mart (WMT) "will be down in sympathy," adding that "this is not good for major brands that have big exposure to Target," including Carter's (CRI) and Hanesbrands (HBI).

PRICE ACTION: Target is down 4.8% to $67.54 in early trading. Wal-Mart, Carter's and Hanesbrands are also lower, down 1%, 2.5% and 1.8%, respectively.