MINNEAPOLIS — Target  here on Wednesday reported better quarterly earnings than expected as a result of strengthening comparable-store sales.
The discounter, like rival Wal-Mart Stores  in its quarterly results for the same period announced Tuesday, said sales accelerated over the course of the quarter, although Target’s 3.9% U.S. comps beat Wal-Mart’s 0.9% comparable-store decrease.
Unlike Wal-Mart, Target benefited from strong sales of apparel and home goods during the quarter, which also helped profits. For the quarter that ended July 30, Target reported net earnings of $704 million on sales of $15.9 billion. Earnings increased 3.7% as compared to the same period a year ago and sales were up 5.1%.
Target officials noted that while economic challenges including unemployment and inflation are limiting consumer confidence and spending, wealthier customers have begun to cautiously spend more and trade up at Target. The company is also getting a sales boost from loyal shoppers as a result of its rewards card, officials said.
“While optimism at all income levels has improved since the recession, wealthy households continue to be the most optimistic,” Kathy Tesija, Target’s chief merchandising officer, said in a conference call Wednesday. “Across all of retail, the 20% of households with the highest incomes are shopping more often and spending more while the other 80% have been cutting trips and spending less. Some of these trends are visible in our own results.”