The real story behind Target's massive earnings miss can be found in its recent trade imports data.

• The recent U.S. ports strike was cited by executives as a factor in their big earnings miss on Thursday, resulting in increased freight costs and overstocked stores.
• According to CNBC's review of trade data, Target imported a similar amount of goods in key months leading up to the strike as it did during the peak shipping season in 2023, with little change in the overall number of cargo containers.
• The data indicates that Target imported more goods than Walmart, with a difference of $1.2 billion, which highlights the issue for the retailer: it failed to predict consumer demand and price sensitivity.

Despite its recent earnings miss and stock decline, the company attributed some of the blame to the U.S. ports strike, stating that the preemptive action to move more product into the U.S. ahead of October resulted in higher freight costs. However, cargo container trade data reviewed by CNBC reveals a more complex story.

Despite lasting only a few days, the port strikes that spanned from New England to Texas caused many companies, including Target, to reroute and pull forward shipments, ensuring they had sufficient inventory for the holiday season.

Target CEO Brian Cornell stated on a call with reporters that the "softness in discretionary categories" and costs associated with expedited shipments and preparing for the October port strike negatively impacted the company's quarterly performance.

On Wednesday, Michael Fiddelke, Target's executive vice president and chief operating officer, revealed to CNBC that higher supply chain costs posed a challenge in the quarter.

"We had to take action to move our product ahead of the port strike, which resulted in additional costs," Fiddelke stated. "Unfortunately, a slowdown in discretionary demand and some cost pressures have forced us to lower our guidance after raising it in the previous quarter."

According to ImportGenius's analysis of cargo container volumes, Target's peak season imports for 2024 were flat to down compared to 2023, despite the ongoing strike.

William George, director of research for ImportGenius, stated that the slight difference in the volume of twenty-foot equivalent units (TEUs) between June and September 2023 compared to the same period in 2024 is noteworthy. He explained that they would anticipate a significant increase due to pre-ILA strike front-loading. However, the decline in the stock, which reached 21% on Thursday, indicates that flat truly means down.

The data indicates that Target increased its container intake through West Coast ports, with the top three ports being Savannah, Georgia; Long Beach, California; and the Port of Virginia.

The freight rate for a 40-foot container in July was between $9,000-$10,000, which was higher than the rate in June of $6,000-$7,000. The price increase was due to the combination of peak shipping season and the pull forwards happening ahead of the strike. However, the overall level of imports by Target in 2023 and 2024 does not suggest that any short-term price hike was a major factor in the quarter.

"According to Lynn Hughes, an investigative analyst with ImportGenius, our data indicates that the majority of Target's holiday containers arrived between July and August during the two periods reviewed over the summer. While there was a slight increase in imports in June, it was not significant."

Fiddelke's import strategy led to the retailer being "a little bit fuller earlier in the quarter than desired, but it was necessary to protect the guest experience."

Storch Advisors CEO Jerry Storch stated that Target is facing the consequences of larger corporate errors, and that the retailer's overreliance on discretionary items in its sales mix is weakening its value positioning.

"Storch stated that Target's main issue is that their strategy is not resonating with consumers in the current environment. Despite consistently lagging Walmart's sales every quarter for several years, the gap was 500 basis points in the most recent quarter, which is a significant difference. Storch believes that bringing in too much freight early could explain a cost or inventory issue, but not a sales miss of this magnitude."

The retailer's full year earnings forecast is now below its earlier guidance, indicating that Target executives may have misinterpreted the demand picture.

If Target did not increase the number of shipping containers it imported compared to the previous year, despite bringing in a higher dollar value, the trade data indicates that it still imported too much. According to Panjiva's customs data aggregation, Target imported 25,000 shipments worth $1.3 billion from May 31 to August 31. During the same timeframe, Target imported 40,000 shipments worth $2.5 billion.

Throughout the year, Target has been in a discounting mode. In May, it reduced prices on approximately 5,000 frequently purchased items, including diapers, bread, and milk. In October, it added another 2,000 items to the discount list. By the end of the holiday season, a total of 10,000 items will have lower prices.

According to Joe Feldman, senior managing director for retail consultant Telsey Advisory Group, the problems that occurred at Target will lead to the company's continued discounting. The retailer took measures to speed up and redirect shipments to the West Coast to avoid port strikes on the East and Gulf coasts, while also anticipating increased demand for discretionary goods. These actions put pressure on costs and resulted in elevated inventory levels.

Feldman stated that the company must intensify its promotional efforts in the fourth quarter to liquidate its inventory and conclude the year with a tidy balance sheet.

Walmart's former CEO, Bill Simon, stated that while short-term supply chain issues may occur, the fact that Walmart is capturing some of Target's more affluent customer base is more significant. Specifically, Walmart has reported low single-digit growth in discretionary general merchandise categories, while Target has experienced a decline in those categories.

Walmart hit a new all-time high on Wednesday.

Simon stated that Walmart's inventory numbers suggest that if the strike was a supply chain issue, all retailers had to manage, Walmart did a better job. Inventory was down 0.6%, with Walmart sales growing 5%. "I would have expected it [inventory] to go up 3-4%," he said. "With any frontloading for the port strike, inventory would be up even higher than that."

Despite Target's overall trade numbers for peak season this year being the same as last year, according to Simon, the market share shift indicates that Walmart did not overload, but based on its struggles with consumers, "Target did."

—CNBC's Melissa Repko contributed reporting.