Discounts and sales events have remained a significant sales driver, as consumers emerge from a more than two-year stretch of high inflation. It’s unclear how much those deals will cut into Target’s and other retailers’ profit margins, and whether sales will keep improving if promotions fade away.

Target reported strong holiday sales on Thursday, giving its stock a boost. The retail chain said sales increased 2% on a comparable basis in the last two months of 2024 from a year earlier, and overall sales rose 2.