N – Target Corp's quarterly profit beat Wall Street forecasts as the discount chain lured shoppers with a wider variety of food products and 5 percent discounts for its cardholders.
Target said it had earned $637 million, or 96 cents per share, in the third quarter ended on Oct. 27, up from $555 million, or 82 cents a share, a year earlier.
Excluding a gain from the pending sale of its credit card receivables, the profit was 81 cents per share, 4 cents more than what Wall Street analysts were expecting, according to Thomson Reuters I/B/E/S.
The company said it expected to earn between $1.45 and $1.55 a share in the holiday quarter, including expenses linked to its entry into Canada next year. That compares with analysts' forecasts of $1.51.
Target previously said third-quarter sales had increased 3.4 percent to $16.60 billion. Sales at stores open at least a year were up 2.9 percent. That came largely from higher prices and customers' buying more items per transaction.
Adding more food to the stores and offering a 5 percent discount to cardholders has attracted shoppers but also weighed on profit rates. Gross margin during the quarter slipped 0.2 points to 30.3 percent of sales.
Target said 14 percent of sales during the quarter were paid for with its debit and credit cards, compared with 9.5 percent a year earlier.
The company has been opening smaller city stores and is set to open its first Canadian stores in 2013. It will also sell a line of holiday goods with upscale department store Neiman Marcus Group Inc in December.
Shares of Target were up 1 percent at $62 in premarket trading.