NEW YORK (AP) -- Target Corp. raised its profit outlook Wednesday after reporting better-than-expected first-quarter results that were boosted by increased spending on food and cheap chic fashions.
Like most retailers, Target has had the challenge of trying to find ways of luring cautious U.S. shoppers into stores amid a flood of mixed economic news that has them scrutinizing every purchase. The job and housing markets are still shaky, but falling gas prices have given consumers hope.
Target, which mixes stylish clothes and trendy decor under the same roof as toothpaste and cereal, recently has had success drawing customers into stores with two growth initiatives. It has been offering a larger selection of foods and a program it started in 2010 that gives shoppers a 5 percent discount when they pay with Target-branded credit and debit cards.
The retailer, based in Minneapolis, said profit rose 1.2 percent to $697 million, or $1.04 per share, in the quarter ended April 28. That compares with $689 million, or 99 cents per share, in the year-ago period. Excluding costs associated with its expansion into Canada next year, the per-share results would have been $1.11. Revenue rose 5.9 percent to $16.86 billion.
Results beat the profit of $1.02 per share on revenue of $16.83 billion analysts polled by FactSet were expecting.
Revenue at stores opened at least a year rose 5.3 percent, the strongest performance in six years for that period. The measure is considered a key indicator of a retailer's health.
The strong showing came despite a weak finish to the quarter. Like most retailers, Target's business in April was disappointing as warmer-than-usual weather earlier in the year pulled sales forward.
To boost sales, the company has teamed up with unique specialty shops to offer limited edition merchandise, from dog biscuits to platform shoes. The shops were launched earlier this month. The discounter also plans to create mini shops of Apple Inc. products in 25 of its stores this year.
Additionally, Target has teamed up with designer Todd Oldham and will be launching an exclusive collection of art supply and activity kits for children under the name Kid Made Modern for the fall.
The company also preparing to expand into Canada next year, its first expansion outside the U.S. It's poised to begin opening the first of between 125 and 135 stores in Canada at former Zellers locations acquired from Hudson's Bay Co.
Based on better-than-expected first-quarter results, Target raised its full-year profit guidance by 5 cents. Target now expects earnings per share to be in the range of $4.60 per share to $4.80 per share. Analysts had expected $4.28 per share.
Target's CEO Gregg Steinhafel said during an address to investors that company officials remain "confident in our strategy" despite that they expect "the current economic recovery will continue to be slow and uneven."
Target's stock rose 24 cents to close at $55.32 Wednesday.