Revenue for the discount retailer grew 11% to $10.9 billion from $9.8 billion in last year's third quarter, while earnings from continuing operations climbed 22% to $330 million from $271 million. Meanwhile, comparable-store sales for the quarter increased a respectable 4.5%. Target benefited from a pickup in consumer spending, which increased 0.6% in September following a decline of 0.1% in August.
Whatever the consumer spending trends, Target is better prepared than other discount retailers, such as Wal-Mart
As the company continues to crusade on the merits of its cool yet affordable merchandise, its future direction seems clear. Indeed, Target has already shown its cards in a recent initiative offering tailor-made clothing. The retailer can now expand such premium services as well as offer additional pricier merchandise, while staying true to its core discounter image. Market research has shown that the average Target shoppers are wealthier than their Wal-Mart counterparts. With their extra dollars, these folks may be more inclined to shell out for certain Target purchases, even as they congratulate themselves for saving on other items.
The big question for Target now is what it will do with the pile of cash on which it is sitting following its sale of Mervyn's. Fool contributor Salim Haji has offered some interesting suggestions. Whatever Target decides, the company's powerful brand will serve it well.
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Fool contributor Brian Gorman is a freelance writer in Chicago. He does not own shares of any companies mentioned in this article.