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Target Corp. (NYSE: TGT) Has Dethroned Wal-Mart as the Discount King

Target Corp. (NYSE: TGT) the second-largest U.S. discount retailer, may have found a strategy to oust Wal-Mart Stores Inc. (NYSE: WMT) as the No. 1 discount-shopping source.

For years retailers have tried to get an edge on Wal-Mart, and through added business segments, new discounts and a streamlined store focus, Target may have done just that.

Even with a tough outlook for U.S. retail spending, the company is expected to do well for the rest of the year.

Burt Flickinger, managing director of Strategic Resource Group, said Target's been delivering all the right moves a retail company should make when the economy falters.

"Target's strategic plan is much stronger than Wal-Mart," Flickinger said. "Wal-Mart is going the wrong way."

Target Corp.: Shoppers' Delight

To compensate for a stagnant economy, Target slowed store openings and gave added incentives through discounts. The efforts helped boost same-store sales 3.9% last quarter, the biggest boost since 2007.

It also opened a grocery section in most stores to become more of a one-stop shopping experience, like many Wal-Mart locations. The grocery business boosted profitability and only slimmed margins to 31.6% from 32%.

Target's focus on consumable items is part of a strategy to generate more same-store sales in a few geographic regions, compared to geographically diversified Wal-Mart. The business shift has paid off.

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