Target posts a surprise 18% gain

The first quarter was a tough one for many retailers, so Target Corp.’s 18% profit growth took investors by surprise .

Despite worries about rising gasoline prices and a cool, wet April keeping some shoppers away, the Minneapolis-based retailer managed what Wal-Mart Stores Inc. and jeweler Zale Corp. could not. It beat Wall Street expectations and predicted full-year results would be in line with analyst expectations, although it warned that growth would not be as fast during the rest of the year.

But for the moment, at least, it appears that Target’s higher-income customers are still spending in a way that other retailers are not seeing.

“At the current time, we do not see any near-term economic indications that give us an undue amount of concern, though we are certainly prepared to manage our business in a more difficult or competitive climate,” Target Chairman and Chief Executive Bob Ulrich said.

Target shares rose 56 cents to $58.60.

The nation’s second-largest discount retailer said it earned $651 million, or 75 cents a share, during the quarter that ended May 5, up from $554 million, or 63 cents, a year earlier. Revenue rose 9% to $14.04 billion.

Analysts surveyed by Thomson Financial had expected profit of 71 cents a share on revenue of $14.17 billion.