Target Profit Boosted by Higher Prices

Target Corp. (TGT) Thursday reported a 26 percent jump in quarterly earnings, beating expectations, as it kept prices up and reaped bigger profits from its credit card operations.

The results were in contrast to No. 1 discounter Wal-Mart Stores Inc. (WMT) which saw profit rise 13 percent and earnings per share come in weaker-than-expected, excluding one-time items.

Wal-Mart (search) blamed soaring energy prices and cool, wet spring weather for the disappointing results. Target focuses on slightly higher income shoppers than Wal-Mart does, making Target less susceptible to gasoline prices.

Target, the No. 2 U.S. discount chain, said it earned $494 million, or 55 cents per share, in the first quarter ended April 30, compared with $392 million, or 43 cents per share, in the same period a year earlier. Results from last year exclude profits from department stores that Target sold.

Analysts, on average, expected a profit of 54 cents per share, according to Reuters Estimates.

Including profits from the Marshall Field's (search) and Mervyn's (search) department stores that Target sold, last year's earnings were $432 million, or 47 cents per share.

Revenue rose 12.7 percent to $11.48 billion in the quarter, helped by a 6.2 percent increase in sales at stores open at least a year.

Credit card revenue rose 12.6 percent to $321 million. Pretax profit from that business rose 27.9 percent to $142 million, helped by a dip in the provision for bad debt to $106 million from $111 million.

Target said it remained "confident" that profits will continue to grow in 2005, but gave no firm forecast. The retailer is expected to detail its earnings expectations on a conference call with analysts later Thursday.