Target beats forecasts as its summer sales perk up

US RETAILER Target reported a bigger-than-expected rise in quarterly profit and forecast a more profitable year than analysts were anticipating yesterday, as its credit card business continued to grow and sales picked up as the summer progressed.

Target has more than 1,760 US stores and is getting ready to open stores in Canada.

Target has been adding groceries to more of its stores, a move that boosts sales but also pressures profitability, as food carries lower margins than merchandise such as clothing. However, its gross margins fell less than expected to 31.6 per cent in the quarter.

Target earned $704m (£425m) in the second quarter, up from $679m a year earlier.