NEW YORK -- Target's heavy discounting at Christmas squeezed fourth-quarter profits, but its trendy assortments and spiffed-up presentations induced shoppers to spend more.
The company, based in Minneapolis, offered an upbeat outlook, sending shares 4 percent higher.
Target said the results, released Wednesday, show the company has made solid progress in reinvigorating its business and winning back shoppers. When Chief Executive Officer Brian Cornell took over in 2014, the company initiated an aggressive plan to regain its status after a series of setbacks, including a debit and credit card breach that hurt sales and profits for months.
Under Cornell, the company got rid of its money-losing Canadian operations and shook up its leadership ranks.
During the recession, the company's focus shifted to an expanded grocery section. It seemed slower in getting ahead of style trends than it had in the past.
During the Christmas shopping season, Target battled it out with Wal-Mart and online leader Amazon.com, heavily discounting goods and bringing back free shipping online. Traffic in stores rose and online sales surged 34 percent, after such sales jumped 30 percent in the quarter before.
The maneuvers helped drive comparable-store sales up by 1.9 percent, the sixth consecutive quarterly increase. Customer traffic rose for the fifth quarter in a row.
In the same quarter, Wal-Mart stores in the U.S. recorded a 0.6 percent increase in revenue at stores open at least a year.
Target earned $1.43 billion, or $2.32 per share, in the quarter that ended Jan. 30. That compares with a loss of $2.64 billion, or $4.10 per share, in the year-ago period, when the company incurred hefty charges related to its retreat from Canada.
The heavy competition that forced steep discounts did take its toll.
Adjusted earnings results were $1.52 per share, a bit below the $1.54-per-share projections from Wall Street, according to FactSet.
Revenue slipped 0.6 percent to $21.63 billion, also just shy of Wall Street expectations, on the sale of its pharmacy business to CVS.
Revenue for its so-called signature categories -- fashion, baby, kids and wellness -- grew more than three times faster than the company average during the fourth quarter.
"Target's results demonstrate that we are focused on the right strategic priorities," Cornell said in a company news release.
Target now expects first-quarter profits of between $1.15 per share and $1.25 per share. For the full year, it expects profits to be $5.20 to $5.40. Analysts expect $1.19 for the first quarter and $5.17 for the year.
"While we can debate the strength of the fourth-quarter results given the better sales trends offset by gross margin declines and [earnings per share] miss, it is clear that fiscal year 2016 guidance is strong," Sean Naughton, an analyst with Piper Jaffray, said in a note to clients.
Target shares rose $2.95 to close Wednesday at $76.94.
Information for this article was contributed by Shannon Pettypiece of Bloomberg News.
Business on 02/25/2016