updated 11/17/2009 9:04:13 AM ET 2009-11-17T14:04:13

Target Corp.'s third-quarter profit climbed 18 percent, the cheap chic retailer said Tuesday, as it cut costs and did better in its credit-card business. Still, it offered a conservative outlook for the holidays.

The low-price chain, which has been locked in a discounting fight with competitor Wal-Mart Stores Inc., said it expected markdowns and sales to drive business this season. While those tactics can draw big crowds, they also cut into profits.

Target was terse in its assessment.

"In light of the current and projected economic environment and expectations for a highly promotional holiday season, Target remains cautious about fourth quarter performance and is planning conservatively in both business segments," executives at the company said in a statement.

Wal-Mart and Kohl's have issued similar forecasts.

Target's third-quarter profit was helped by its ongoing cost-cutting efforts along with better sales in its stores and better profit from its credit card business.

The company earned $436 million, or 58 cents per share during the three month period that ended in late October. Last year, it earned $369 million, or 49 cents per share.

Revenue rose 1.1 percent to $15.28 billion. Last year, overall revenue was $15.11 billion.

The results trumped Wall Street forecasts. Analysts surveyed by Thomson Reuters expected a profit of 50 cents per share and revenue of $15.25 billion.

Target, which is based in Minneapolis, has been fighting with its larger competitor as recession-battered customers switch to cheaper stores and swap splurging for saving. Meanwhile, as the holidays near, the two are locked in an online battle for the deepest discounts on popular items, including books and DVDs.

CEO Gregg Steinhafel said the retailer believes it can snatch customers from competitors during the holidays.

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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