Target reported sales and earnings that missed Wall Street's expectations on Tuesday, in what was a disappointing holiday quarter for the big-box retailer. Its outlook for fiscal 2017 also fell well short of expectations.

Target's stock price sank more than 13 percent in early trading, putting it on pace for its worst day since Aug. 31, 1998, when the company shed more than 16 percent.

Here's how the company did:

—EPS: $1.45 per share, excluding items, versus $1.51 per share expected by Thomson Reuters analysts' consensus.

—Revenue: $20.69 billion versus $20.7 billion expected by Thomson Reuters.

—Same-store sales: A decline of 1.5 percent versus the 1.4 percent decline expected by FactSet.

A year earlier, Target earned $1.52 a share on $21.6 billion in revenue. The retailer's sales decline is partly attributable to the sale of its pharmacy business to CVS in December 2015. That pressure, however, is not the only reason the discounter is struggling to keep up with Wal-Mart.

"Our fourth-quarter results reflect the impact of rapidly changing consumer behavior, which drove very strong digital growth but unexpected softness in our stores," Target CEO Brian Cornell said in a statement.

Target's gross margin was punished during the fourth quarter due to elevated markdowns and an increase in digital sales. The web accounted for 6.8 percent of the company's sales in the fiscal fourth quarter, up from just 5 percent one year earlier.

Things are expected to remain tough for the fiscal year that just got underway. Target said it expects to earn $3.80 to $4.20 a share in 2017, compared with Wall Street's expectation of $5.37 a share. That reflects expectations for a low-single digit decline in comparable sales.

Target will outline its plan to revitalize its business with shareholders Tuesday morning. At that meeting, it will detail the new financial model for fiscal 2017, the company said.

In the company's earnings release, Cornell teased some of the announcements Target will make at that meeting, saying the company will accelerate its investments into a "smart network of physical and digital assets" and exclusive products. The latter includes the launch of more than 12 new brands, representing more than $10 billion in sales, over the next two years.

The company also plans to lower prices.

"We will invest in lower gross margins to ensure we are clearly and competitively priced every day," Cornell said. "While the transition to this new model will present headwinds to our sales and profit performance in the short term, we are confident that these changes will best position Target for continued success over the long term."

As its low-price competitor has been growing traffic and sales through a series of investments in its stores and workers, the number of customers visiting Target stores has slipped. After reporting disappointing holiday results for November and December, the chain narrowly avoided a third-straight quarter of lower traffic.

That's despite Target's elaborate Christmas strategy that included an increase in the number of advertisements focused on value, thousands of exclusive toys and an extended free shipping window. Even as revenue on Target.com shot more than 30 percent higher, the company's overall same-store sales fell 1.3 percent in November and December, causing it to walk down expectations for fiscal fourth-quarter comparable sales and earnings.

"Target's fourth quarter, while disappointing on multiple fronts, includes the bright spot of 34 percent online sales growth, which is impressive, and validates the company's decision to accelerate its investment in this channel," Moody's lead retail analyst Charlie O'Shea said.

Despite the company's lofty targets, results at Target have been choppy over the past year, as growth in focus areas like digital, fashion and wellness haven't been enough to offset weakness in media and grocery.

Many investors have grown impatient with Target's lack of progress in food, which accounts for roughly 20 percent of sales. They had expected major changes in the division when Cornell joined Target in August 2014, given his background at PepsiCo.

The company is expected to outline plans for its grocery department in Tuesday's meeting with Wall Street.

John Zolidis, an analyst at The Buckingham Research Group, said prior to Target's earnings release that he hoped the company would pare back its previous goal to increase comparable sales by 3 percent annually, which it announced at last year's meeting.

"We believe Target shares could perform much better if the company meaningfully reduces expectations," Zolidis said.