NEW YORK (MarketWatch) — Target Corp. reported Wednesday a better-than-expected 23% increase in third-quarter profit, after the No. 2 U.S. discount retailer more than doubled its credit-card segment income and expanded fresh food assortments to boost sales.

The company TGT, +0.73% , which in mid-October began to give a 5% discount on most purchases made with its Target credit and debit cards to lift demand, also forecast fourth-quarter comparable sales would be the best in the past three years.

“We are well-positioned for the fourth quarter,” said Gregg Steinhafel, Target’s chief executive.

Target shares rose 4% Wednesday afternoon.

Third-quarter net income rose to $535 million, or 74 cents a share, from $436 million, or 58 cents, earned in the same period a year earlier. Sales in the quarter ended Oct. 30 rose 3% to $15.23 billion with comparable sales increasing 1.6%.

Analysts surveyed by FactSet Research had, on average, expected a quarterly profit of 68 cents a share.

Minneapolis-based Target’s results and sales forecast added another positive signal as the retail industry readies for its biggest selling period during the holiday season, analysts said.



On Tuesday, larger rival Wal-Mart Stores Inc. WMT, +1.42% gave a fourth-quarter forecast that exceeded Wall Street estimates as the company projected that comparable sales at its namesake U.S. division, the company’s largest, would return to positive same-store sales growth after six straight declines. See story on Wal-Mart.

To bolster demand, Target has remodeled its stores through a PFresh program, adding perishable foods and putting them up front in a bid to draw customers through the door. The company also has revamped electronics and other departments, putting up big signs and lowering shelf sight lines to make it easier for customers to find what they’re looking for.

Steinhafel said in September that PFresh has given a 6% to 7% instant sales lift to the remodeled locations — with an aggregate 10% expected over three years.

The company has also projected the PFresh program and the 5% discount plan would contribute about a percentage point each in incremental same-store sales in the fourth quarter. Target takes measure of remodeling.

During the latest quarter, credit-card segment profit jumped to $130 million from $60 million as expenses incurred for bad debts dropped 64%.

Retail segment profit before interest expense and income taxes rose 3.2% to $816 million, Target said.