Target beats estimates on credit cards business****

CHICAGO, May 19 (Reuters): Target Corp posted a bigger-than-expected rise in quarterly profit Wednesday, as soaring profitability in its credit card business mitigated the impact of some sluggish sales at its stores. Shoppers visited the discount chain for food and other basics, but spent cautiously. Sales of discretionary goods like apparel have been under pressure as shoppers digest higher costs for food, gasoline and other essentials. Shares of Target retreated from premarket gains and were down 3 cents to $50.75 with about an hour to go before the market opens. Target has been adding fresh groceries to more of its stores and signing up more shoppers for its credit cards. But groceries carry lower margins than other parts of the store and the credit cards' 5 per cent discount further reduces margins. Still, those initiatives have led to more visits and sales, even as shoppers "remain cautious in their spending," said Chief Executive Officer Gregg Steinhafel. Target earned $689 million, or 99 cents per share, in the first quarter ended on April 30, up from $671 million, or 90 cents per share, a year earlier. Analysts, on average, expected it to earn 94 cents per share, according to report. Sales rose 2.8 per cent to $15.58 billion, with sales at stores open at least a year up 2 per cent, the company said earlier this month. Total revenue, including credit card revenue, rose 2.2 per cent to $15.94 billion. More shoppers are using the company's credit and debit cards, with 7.6 per cent of sales in stores paid for with the cards in the quarter, up from 4.9 per cent a year earlier.