Target Profit Up on June Sales

Discount retailer Target Corp. on Thursday posted a bigger-than-expected 50% jump in quarterly profit on strong June sales of summer clothing and higher credit card earnings.

The retailer said second-half results probably would meet Wall Street forecasts -- disappointing some investors who had hoped for a more optimistic forecast.

Target said it earned $540 million, or 61 cents a share, in the second quarter ended July 30, compared with $360 million, or 39 cents, a year earlier. Revenue rose 13.6% to $11.99 billion.

Last year’s results exclude a $1.02-billion gain on the sale of the Marshall Field’s department store chain but include a loss of $74 million, or 5 cents a share, from early retirement of debt.

Analysts, on average, had expected a profit of 59 cents a share, according to Reuters Estimates. The company last month raised its forecast for the quarter to at least 58 cents a share after surprisingly strong June sales.

Target said it was adding luxury goods such as Riedel wine glasses and 600-thread-count sheets, raising the bar in a battle with larger rival Wal-Mart Stores Inc. for wealthier shoppers.

Target also took aim at clothing retailers Ann Taylor Stores Corp. and Gap Inc., saying it would bring in wear-to-work clothing comparable to merchandise found at Ann Taylor stores or Gap’s Banana Republic -- but at half the price.

“It is a declaration of war [on Ann Taylor and Gap] and it is going to be successful,” said Kurt Barnard, head of consulting firm Retail Forecasting Group.

Barnard said Ann Taylor and Gap were already struggling to boost sales and would be hard pressed to fend off Target, which has found a niche selling low-priced trendy merchandise by designers such as Isaac Mizrahi.

Target’s sales at stores open more than a year -- or same-store sales -- have grown faster than Wal-Mart’s in recent quarters, prompting Wal-Mart to bring in its own version of Target-style “cheap chic” merchandise such as fluffy towels and contemporary furniture in a bid to draw more middle-income shoppers.

Shares of Target gained 11 cents to $55.65.