NEW YORK -- Target, which is spending billions to remodel stores and strengthen its online business, showed signs Wednesday that the turnaround efforts are starting to win back shoppers.

The retailer reported that a key sales figure rose in the second quarter, its revenue beat Wall Street expectations and its online sales jumped 32 per cent. The Minneapolis-based company also boosted its earnings expectations for the year.

"It's a clear sign that we're pursuing the right strategy," said CEO Brian Cornell in a conference call Wednesday.

The strong results from Target came a week after J.C. Penney, Macy's and other major retailers reported another quarter of falling sales as more people shop online or at other stores. Rival Walmart will report its earnings on Thursday.

Target is spending US$7 billion in three years to remodel old stores, open small ones in cities and college towns and offer faster delivery for online orders. It is also adding more clothing and furniture brands, and said Wednesday that its children's line Cat & Jack brought in US$2 billion in sales since its launch a year ago.

Same-store sales, a key measure of a retailer's health, rose 1.3 per cent in the quarter, beating the 0.3 per cent rise analysts expected, according to FactSet. Digital sales made up the bulk of the overall same-store sales increase.

Profit fell 1.2 per cent to US$672 million, or US$1.22 per share, as higher costs cut into sales gains. Earnings, adjusted for one-time gains and costs, came to US$1.23 per share, which was 3 cents better than expected, according to a survey of industry analysts by Zacks Investment Research.

Revenue rose 1.6 per cent to US$16.43 billion, beating the US$16.28 billion Street estimate.

Analysts at Stifel said Wednesday that they viewed Target's overall results "favourably, especially given worsening trends across the majority of retailers."

For the current quarter ending in November, Target Corp. expects its per-share earnings to range from 75 to 95 cents.

The company expects full-year earnings in the range of US$4.34 to US$4.54 per share, up from prior guidance of US$3.80 to US$4.20 per share.

Target's shares rose 2 per cent to US$55.45 Wednesday morning. However, the stock is still down nearly 24 per cent since the beginning of the year.