CHICAGO – Target Corp. (TGT) said on Thursday that quarterly profit rose on strong sales and big returns from its credit card business.
The retailer, which ranks behind Wal-Mart Stores Inc. (WMT) in the U.S. discount segment, said net income increased to $435 million, or 49 cents per share, in the fiscal third quarter ended October 29. That compares with $324 million, or 36 cents per share, from continuing operations a year earlier.
Analysts, on average, expected a profit of 45 cents per share, according to Reuters Estimates. Several analysts nudged up their expectations in the past week after Target reported better-than-expected October sales growth.
Target's strategy is to match Wal-Mart's prices on commodity items such as cleaning supplies, and then use its trendy clothing and housewares to boost sales and profit. The plan appears to be working as Target's sales at stores open at least a year — a key retail measure known as same-store sales — have outpaced Wal-Mart's in recent quarters.
Wall Street has noticed too. Target's shares trade at about 18.4 times analysts' earnings forecasts for the next fiscal year, compared with just under 16 times for Wal-Mart.