Target's stock tumbled on Tuesday after the retail chain reported lower-than-expected profit leading into the vital holiday shopping season.

Net income at the Minneapolis-based company grew 30 percent to $622 million, or $1.17 a share, slightly less than what analysts anticipated for the three months through Nov. 2. Target's gross profit margin shrank 90 basis points to 28.7 percent amid higher costs for filling digital orders after online sales increased 49 percent.

Target is positioning itself for 2019 by achieving "greater scale across the full slate of initiatives – creating efficiencies and cost-savings," Chief Executive Office Brain Cornell said in a statement.

The company's shares fell 12 percent to $68.80 in pre-market trading in New York.

Retailers are hoping for a blockbuster holiday shopping season, as consumer sentiment remains high after the GOP-led tax cuts increased take-home pay for most Americans. Target previously announced it would offer free shipping on all purchases, a direct challenge to Amazon and one the e-commerce giant soon mimicked.

Target's revenue in the three months through September rose 5.6 percent to $17.8 billion, as same-store sales – an important metric for retailer performance – increased 5.1 percent.

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