Cheap chic seemed to be out for a while, as consumers grew increasingly austere -- but it might be coming back in. Target's (NYSE: TGT) fourth-quarter results were more stylish than shabby.

Net income surged 53.7%, to $936 million, or $1.24 per share. Net sales increased 3.7% to $19.7 billion. However, Target's same-store sales hardly budged, up by just 0.6%. Still, it's heartening that Target increased its net sales in the quarter. Relying less on clearance sales also helped the company increase gross margin by 1.8 percentage points, to 29.1%.

Target's share buyback program, suspended until last month, makes for an interesting (and distressing) aside. In the fourth quarter, Target shelled out $423 million to repurchase about 8.3 million shares at an average price of $50.74. Over the course of the entire program since 2007, Target has spent $5.3 billion acquiring shares at an average price of $51.36. Unfortunately, Target shares traded at as low as $25 last year, which means this program's not the greatest use of capital. Shareholders should seriously ponder whether management's capital-allocation skills are as strong as they should be.

Rival discounter Wal-Mart (NYSE: WMT) seemed to hit a wall last week, amid signs of weakness in domestic sales. (Granted, Wal-Mart faced tough comparisons to its strong performance during last year's full-on economic crisis.) Earlier this week, quarterly results from Home Depot (NYSE: HD) and Lowe's (NYSE: LOW) showed a few hopeful signs, but risk remains in retail. A stubbornly high unemployment rate has kept consumers less than confident.

Although Wal-Mart has long seemed like a solid defensive stock, Target is a high-quality discount retailer, too. Both Target and Wal-Mart seem to be adjusting to the recent economic woes that initially threw the former for a loop, and Target's responded to the recession with several innovative initiatives.

Stocks like Target or Wal-Mart make sense in leaner times, since both cater to consumers seeking discounts. Investors with a hunger for retail should avoid riskier stocks such as Abercrombie & Fitch (NYSE: ANF) and Borders (NYSE: BGP), both of which have stumbled operationally in the past year or so.

Target is a solid defensive contender, with its strong brand and broad appeal. It trades at a forward price-to-earnings ratio of 12, on par with Wal-Mart, and in less financially freaked-out times, its reputation for cheap chic and fun merchandise give it broader consumer appeal than its blander Bentonville-based rival.

Even though Target could have paid less in its share repurchase program, long-term investors could probably still do well buying Target at these levels. Buying at an even cheaper price? That'd be just about brilliant.

Does Target's price appeal to you now, or do you prefer Wal-Mart or some other retail stock? What do you think about Target's share repurchase program? Sound off in the comment box below.

Home Depot, Lowe's, and Wal-Mart Stores are Motley Fool Inside Value recommendations. Try any of our Foolish newsletters today, free for 30 days.

Alyce Lomax does not own shares of any of the companies mentioned. The Fool has a disclosure policy.