Comparable sales decline for second straight quarter.

MINNEAPOLIS — Target Corp. today posted better-than-expected earnings for its fiscal third quarter despite another decline in comparable-store sales. Shoppers remain cautious, the company said, but did spend for necessities like food, school supplies and beauty aids.

CEO Brian Cornell cited pressures like higher interest rates, increased credit card debt and reduced savings rates which have left shoppers with less discretionary income, forcing them to make trade-offs.

Target managed to exceed its earnings forecast thanks to a companywide commitment to efficiency and disciplined inventory management, he said. The retailer said its inventory position was 14% leaner than it was at the end of the comparable period a year ago. The company’s operating income margin rate of 5.2% topped last year’s rate of 3.6%. Target’s net income of $971 million, or $2.10 a diluted share, was up 36% from its third quarter a year ago, when its profit fell more than 50%. Total revenue was $25.4 billion compared to $26.5 billion a year earlier.

Comparable sales were down 4.9% in the three months to October 28. In-store comps declined 4.6% while digital comps were down 6%.

Revenue from same-day services increased more than 8% in the quarter, led by a 12% increase in curbside pick-up.

Target said it added more than 1 million members to its loyalty program. Target Circle members took about five more trips than non-members during the quarter and spent about $300 more overall.

Target paid dividends of $507 million in the third quarter, compared with $497 million last year, reflecting a 1.9% per-share increase in the dividend. The company did not repurchase any stock in the third quarter.

For the trailing twelve months through October 28, after-tax return on invested capital (ROIC) was 13.9%, compared with 14.6% for the trailing twelve months through third quarter 2022. The decline reflects faster growth in average invested capital compared with after-tax returns, the company said.

Target said it expects the holiday quarter to look roughly the same, with comparable sales in a range of around a mid-single digit decline and adjusted earnings per share of $1.90 to $2.60.

To prepare for the holidays, Target has adjusted its prices with two-thirds of its holiday toys under $25 and a similar amount of its decorations priced below $20.