Shares of Target are up about 2 percent Wednesday after the company reported increased sales for the quarter that ended last month and raised its profit forecast for this year.
Sales at stores open at least a year rose 3 percent. So-called comparable store sales are a key measure of a retailer's strength because the tally factors out recently opened or closed stores.
Total sales rose 3.5 percent to $16.5 billion. Net income however, was essentially flat, at $704 million.
Price competition with retail rivals and increased sales in the lower-margin grocery sections have reduced Target's profit margins.
Still, CEO Gregg Steinhafel said the outlook for the retailer is good.
"We're pleased with our performance through the first half of the year and confident in our plans," Steinhafel said. "We expect to continue to gain market share in 2012 and beyond."
The percentage of sales being made through Target-issued credit and debit cards rose to 13 percent. Customers using the cards get 5 percent discounts on their Target purchases. The company expects the cards could eventually account for 20 percent of sales.
Target is joining Walmart, Best Buy and other major retailers in a joint venture that would allow customers to pay for purchases with their mobile phones. This is the latest move in a long-running battle between banks and retailers over fees the banks charge retailers on purchases made with plastic.
"This effort in the mobile space presents a balanced market-driven approach to the future of payments," Steinhafel said.
The retailers hope the move will reduce fees they have to hand over to credit card issuers.