Target Raises Profit Forecast As Groceries Boost Sales

Target Corp. (TGT) raised its annual profit forecast as the second-largest U.S. discount retailer increases sales by adding groceries and enticing more spending from customers with a discount card.

Net income this year will rise to as much as $4.40 a share, the Minneapolis-based chain said today in a statement. That’s up from a previous projection of a maximum of $4.30 a share in May. The average of analysts’ estimates compiled by Bloomberg was $4.30.

The retailer plans to boost sales growth by opening stores in Canada next year, its first expansion outside its home country. Until then, Target has been working to spur sales by adding fresh food sections and offering customers incentives to spend with its credit card, which gives 5 percent off purchases.

“Their retail business is fine,” David Strasser, an analyst for Janney Montgomery Scott LLC in New York, said in an interview. Still, investors should be concerned about Target’s narrowing gross margin and that much of the improvements to its results was generated by the credit-card unit, he said.

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