Target beats Street in Q1

Target (TGT) reported a solid first quarter Wednesday as the effects of its turnaround plan under CEO Brian Cornell start to take hold.

Target reported earnings of $635 million, up more than 50% from the same period last year. The company earned 98 cents a share, with adjusted earnings of $1.10 a share. Analysts expected $1.03 a share, according to Thomson Reuters I/B/E/S.

Target shares are up 1% in afternoon trading.

Sales were $17.12 billion, with a 2.3% increase in sales at stores open at least a year. Analysts expected sales of $17.1 billion, according to Thomson Reuters I/B/E/S. Sales in key categories Target is focusing on, including baby, style and wellness, were more than double the company average, Target said.

The company has been investing more in those categories with presentation, marketing and introducing features in stores like mannequins. Target's Lily Pulitzer collection created a blow out at stores when it debuted last month. While it didn't make a huge impact on the company's financials, "things like the Lily event create all the frosting on everything else we do," Chief Financial Officer John Mulligan said on a call with media.

Target has been undergoing a transformation since Cornell came to the company last summer. The retailer has pulled out of its botched Canadian expansion, invested more in priority categories, and created a more tailored strategy around organic and natural food.

"I think we're really starting to see the benefit of focusing on our U.S. business," Mulligan said.

He added that customers can expect to see more changes in the way stores approach fresh food by 2016. The food category grew in the first quarter but not as much as the rest of the business, he said. Last month, Target hired Anne Dament, a Safeway executive, to lead the company's food strategy.