Net interest expense for the quarter decreased $97 million compared with second quarter 2004. Of this year-over-year improvement, $74 million was attributable to a loss on debt repurchase in the second quarter of 2004 and the remaining $23 million reflected lower average funded balances in the current year, resulting from the application of proceeds from the Mervyn's and Marshall Field's sale transactions. This was partially offset by a higher average portfolio interest rate.

When asked if the company would be interested in leasing vacant space left from shuttered, mall-based May or Federated stores, president Gregg Steinhafel said it was premature to speculate. However, he quickly added that not only was the company financially able to do so, but that moving into shuttered space wouldn't unusual for Target, referring to company's leasing of 35 shuttered Montgomery Ward stores in 2001. During its second quarter, Target operated 1,351 stores in 14 states, opening 23 net new discount stores.

Moving forward, the company plans to maintain an annual increase of 4% to 6% in same-store sales. At the end of Thursday's trading day, Target shares were up 20%, closing at $55.65.