TGT Target Corp

By Chelsey Dulaney 

Target Corp. on Wednesday lifted its profit outlook for the year after posting stronger-than-expected earnings in its second quarter and its fourth straight quarter of same-store sales growth.

The company now expects earnings of $4.60 to $4.75, compared with its prior guidance of $4.50 to $4.65 a share.

Shares of Target, up 5.8% this year, added 4.4% to $83.80 a share in premarket trading.

Target's results have been improving under Chief Executive Brian Cornell, who took the helm of the big box chain a year go. The company has exited its struggling Canada business, reshuffled its executive team, and has been pushing digital sales.

"While the momentum in our financial results is encouraging, we have much more to accomplish, "Mr. Cornell said in a news release. "Looking ahead, we are focused on making further progress against our strategic priorities and are committed to improving operations as we move through the important back-to-school, back-to-college and holiday seasons."

For the current quarter, Target forecast earnings of 79 cents to 89 cents a share. Analysts polled by Thomson Reuters had forecast 86 cents a share.

In the latest quarter, sales excluding newly opened and closed locations rose 2.4%, driven by a 1.6% increase in the number of transactions and a 0.8% uptick in average transaction amount.

Target said growth was also helped by strength in its style, baby, kids and wellness categories. Target has been working to sell more fashion and home goods and stock its stores better.

In all for the quarter ended Aug. 1, earnings grew to $753 million, or $1.18 a share, from $234 million, or 37 cents a share, a year earlier.

The prior-year period included charges to pay down debt and a heavy loss from discontinued operations.

Excluding one-time items, per-share earnings from continuing operations rose to $1.22 a share from $1.01 a share a year earlier.

Target had forecast per-share earnings of $1.04 to $1.14, while analysts polled by Thomson Reuters were looking for $1.11 a share.

Total sales grew 2.8% to $17.4 billion, in line with analysts' expectations, according to Thomson Reuters.

Digital sales grew 30%, slowing from the nearly 38% growth Target posted in the first quarter of the year. Target is trying to shed its reputation as being laggard in digital sales, and Mr. Cornell has set a goal of digital sales rising 40% a year over the next five years. But many analysts think that target is unrealistic.

Target booked $20 million in after-tax losses in the quarter related to exiting its Canada business and $9 million in costs related to the 2013 data breach.

On Tuesday, Target reached an agreement with Visa Inc. that will reimburse card issuers as much as $67 million for costs incurred by its data breach during the 2013 holiday shopping season and said it is working on a similar pact with MasterCard Inc.

Target's results extend its recent streak of outperforming big-box rival Wal-Mart Stores Inc. On Tuesday, Wal-Mart executives warned that profits will miss their goals this year as earnings fell 15% in its second quarter amid higher costs from adding store hours and raising hourly worker pay. Still, the increased spending helped Wal-Mart log a 1.5% increase in U.S. same-store sales.

Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com

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(END) Dow Jones Newswires

August 19, 2015 08:46 ET (12:46 GMT)

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