Kmart issued a statement responding to Target's lawsuit saying it remains committed to its "Dare to Compare" pricing campaign.

"Market research shows significant gains in pricing perception for Kmart. More importantly, increases in transaction count and customer count show customer acceptance of an improved pricing and shopping environment at Kmart.

"It is unfortunate when a competitor has to resort to needless, costly litigation when they discover that they are falling behind in pricing in the retail arena," the statement said.

It added that it would vigorously defend its right to continue the campaign.