Target profit leaps 29% in Q1

Minneapolis Target Corp. reported Wednesday that its first-quarter net income jumped a hearty 29%, citing improvements in credit-card business and higher sales of more profitable items such as apparel.

The retailer reported net income of $671 million for the quarter ended May 1, compared with $522 million in the year-ago period.

Total revenue rose 5% to $15.59 billion, edging Wall Street expectations. Same-store sales rose 2.8%.

Chairman and CEO Gregg Steinhafel said the results came in a "stronger-than-expected economic environment," noting that the retail segment beat expectations as sales of discretionary items with high profit margins such as clothing were particularly strong. Target's gross profit margin increased to 31.3% in the first quarter, up from 30.8% in the prior year. Profitability in Target’s credit-card segment was also well above expectations.

Target's sales results were in sharp contrast with Wal-Mart, which on Tuesday reported a 1.1% drop in same-store sales and a decline in customer counts for the second consecutive period.

To turn around sales, Target has advertised low prices and expanded its food offerings. The retailer also rolled out a new store format starting in April, featuring amped-up home furnishings, larger grocery sections and improved video-game displays.