In the premarket on Wednesday, Target shares fell 3.3%, mirroring the reaction to Walmart's earnings a day earlier, as fears about record-high inflation and anticipated damage to margins outweigh retailers' efforts to express a positive outlook.

In a conference call, Chief Financial Officer Michael Fiddelke said the company is having to absorb at least some of the greater costs it is incurring as it bids for market share.

"Price is absolutely protected," Fiddelke remarked. "We're seeing bigger cost increases than our retail increases."

Gross margins declined to 28% from roughly 31% a year ago, reflecting this. Higher goods and freight costs, as well as increased supply chain expenses from higher compensation and personnel in the company's distribution facilities, were cited as reasons for the margin compression.

Despite witnessing its operating margin declined by 70 basis points to 7.8% in the third quarter from a year earlier, the business kept its full-year guidance at 8%. One-tenth of a% is equal to one basis point.

Total revenue increased by 13% to $25.65 billion, which was higher than predicted. It earned $3.03 per share adjusted for items, which was better than expected. Similarly, the business raised its same-store revenue expectation for the current quarter to about 10%, up from its previous estimate of around 9%.

Target's announcement comes a day after Walmart warned of rapidly rising cost pressures, and a day after the Labor Department reported that the consumer price index climbed 6.2% in October, the highest rate in 31 years.