US retailer Target has reported that its third quarter net earnings rose 22.6% to US$535m on the back of an income tax benefit.

The company said retail sales grew 3% during the quarter ended 30 October to reach $15.2bn, which it attributed to a 1.6% increase in comparable-store sales as well as the contribution from new stores. EBIT in its retail division was up 3.2% to $816m.

The company said third quarter gross margin was down to 30.6% from 30.8% in the same quarter of 2009, but added that the impact of sales mix on gross margin rate was essentially neutral, "as sales increased at a similar pace in both higher-margin and lower-margin categories".

"We're pleased with Target's third quarter financial performance, and we are well-positioned for the fourth quarter," said Gregg Steinhafel, chairman, president and chief executive officer of Target.