Despite beating on earnings and revenue, Target provides a cautious sales outlook for the year.

• Target beat Wall Street's earnings and revenue expectations on Wednesday.
• Target's sales increased as customers visited its stores and website more frequently and purchased more discretionary items such as clothing.
• The retailer stated that it anticipates lower sales for the full year, despite its initial guidance.

Sales grew by 3% in the second quarter, marking a return to growth after a period of sluggish sales and tight profit margins, as announced on Wednesday.

Target exceeded Wall Street's earnings and revenue expectations, with an increase in store and online visits and a rise in sales of discretionary items such as clothing.

Despite the company's previous full-year sales forecast, Target now expects comparable sales for the year to range from flat to up 2%, with the increase likely occurring in the lower half of the range.

Target raised its profit guidance, expecting adjusted earnings per share to range from $9 to $9.70, an increase from the previous range of $8.60 to $9.60.

Shares rose more than 10% in premarket trading.

During a call with reporters, Target's Chief Operating Officer Michael Fiddelke stated that the company adopted a "cautious stance" on its outlook due to the uncertainty of predicting consumers' attitudes and the economy's condition in the upcoming months.

Although we are satisfied with our performance this year and our consumer view remains mostly unchanged, the range of possibilities and the macroeconomic context in consumer data and our business are unusually high, he stated.

According to LSEG's survey of analysts, Target's three-month performance from Aug. 3 exceeded Wall Street's expectations for the period.

• Earnings per share: $2.57 vs. $2.18 expected
• Revenue: $25.45 billion vs. $25.21 billion expected

Target, a retailer known for its trendy but affordable products, has experienced a decline in sales as consumers prioritize spending on essentials like food and housing. Additionally, the company has faced financial challenges due to reduced profits from low-margin items like groceries and losses from damaged inventory and theft, including organized retail crime.

In the second quarter, Target improved its trends by attracting shoppers with new merchandise and reduced prices.

In the year-ago quarter, Target's net income was $835 million, or $1.80 per share. However, in the most recent quarter, the company's net income increased to $1.19 billion, or $2.57 per share, representing a more than 40% year-over-year increase.

Total revenue rose from $24.77 billion in the prior year.

In the quarter, Target's sales increased by 2%, marking the first time in five quarters that the company experienced a rise. The industry metric measures sales both online and at stores that have been open for at least 13 months.

In the quarter, comparable store sales increased by 0.7%, while digital sales experienced a significant growth of 8.7%, with more customers utilizing same-day services such as curbside pickup and home delivery.

In an attempt to boost sales and increase foot traffic, Target has intensified its loyalty program and offered discounts. The company launched its loyalty program early this year and introduced a new paid membership, Target Circle 360, which includes benefits such as free same-day deliveries. Additionally, Target held its own sales event in July to compete with Amazon's Prime Day and announced in May that it would lower prices on approximately 5,000 frequently purchased items, including diapers, milk, and paper towels.

Customers responded positively to the price reductions, and CEO Brian Cornell attributed their contributions to the increase in traffic during the quarter.

While customer traffic on Target's website and in stores increased by 3% in the second quarter compared to the previous year, the average size of customers' shopping baskets decreased slightly, according to Fiddelke.

Apparel sales at Target grew more than 3% in the quarter compared to the previous year, despite the industry-wide pressure on discretionary sales.

The retailer has experienced a surge in sales during the back-to-school season, with customers purchasing affordable items such as $5 backpacks and 25-cent crayons.

Back-to-college shopping is typically a longer season, with students gradually decorating their apartments and dorms.

On Tuesday, Target's stock closed at $144.33. Despite a 1% increase in stock value so far this year, the company's performance has lagged behind the S&P 500's 17% growth during the same period.