Target (NYSE:TGT) reported a much smaller than expected decline in comparable sales for the third quarter of its fiscal year and topped Wall Street’s sales and earnings estimates. Target’s adjusted earnings were $1.04 per share on sales of $16.44 billion in the fiscal third quarter. Analysts had expected earnings of 83 cents a share on $16.3 billion in revenue, according to Thomson Reuters. In the same quarter a year ago, Target earned 86 cents a share on sales of $17.61 billion.

Same store comparable sales fell 0.2 percent in the quarter. That was much better than the previous prediction of a 2 percent fall. Wall Street analysts predicted a 1 percent decline. The company’s same-store sales ended a two-year winning streak in the previous quarter, falling 1.1 percent.

Target’s sharper focus on product categories like kids and children’s items, wellness, and its clothing brands helped comparable sales in those categories reach about 3 percentage points higher than the company overall. The company’s traffic showed a modest improvement from the second quarter, but the number of transactions declined 1.2 percent.

Target attributed the results to a particularly strong back-to-school season. The company also posted strong e-commerce growth for the quarter. Target’s digital sales rose 26 percent in the quarter. Target CEO Brian Cornell said in a statement, “We are very pleased with our third quarter financial results, which reflect meaningful improvement in our traffic and sales trends and much stronger-than-expected profitability.”

During the third quarter, the company returned $1.2 billion to shareholders, with dividends of $345 million and share repurchases of $878 million. The board of directors also authorized a new $5 billion share repurchase program to begin upon completion of the prior $10 billion program.

Target also announced that it was raising its full year profit and sales forecast. The company now expects fourth-quarter comparable sales to range from a drop of 1 percent to an increase of 1 percent. The company is predicting full-year adjusted earnings per share of $5.10 and $5.30, up from a prior forecast of $4.80 to $5.20. The forecast excludes early debt-retirement losses and a small benefit from the resolution of income tax matters. The company’s shares rose 9 percent in pre-market trading after the announcement.

During the holiday period, Target will once again offer free shipping with no minimum spending threshold to drive sales. It will also ramp up its exclusive toy offerings to 1,800, an increase of 15 percent. Target stores will open at 6 p.m. Thanksgiving Day to kick off its Black Friday sale.

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