Shares of Target, which has more than 1,760 U.S. stores and is getting ready to open stores in Canada, rose 4.9 percent to $51.85 in premarket trading.
Target earned $704 million, or $1.03 per share, in the second quarter, up from $679 million, or 92 cents per share, a year earlier.
Analysts, on average, expected it to earn 97 cents per share, according to Thomson Reuters I/B/E/S.
The retailer forecast third-quarter earnings per share of 70 cents to 75 cents, and full-year earnings per share of $4.15 to $4.30.
Analysts were looking for Target to earn 71 cents per share this quarter and $4.12 per share this year.
Earlier this month, Target said second-quarter sales rose 5.1 percent to $15.9 billion, with sales at stores open at least a year up 3.9 percent.
Results in the company's credit card business also improved. Bad debt expense plunged to $15 million from $138 million and profit rose to $171 million from $149 million.
(Reporting by Jessica Wohl. Editing by Robert MacMillan, Dave Zimmerman)