New York
CNN
 — 

After a half year of negative headlines, culture war distractions and a massive stock slump, Target finally had something to cheer.

Target’s profit beat Wall Street’s expectations last quarter, and the stock surged 14% in premarket trading Wednesday. Heading into Wednesday, Target’s stock had dropped 36% over the past year.

Although investors cheered the news, Target is hardly in great shape. Sales tumbled 4.9% — the second quarter in a row sales have dropped.

And the company forecast a weak holiday, as customers continue to forgo discretionary purchases like furniture and electronics. Target expects sales to decline by mid-single digits this holiday season.

But Wall Street was more focused on Target’s profit last quarter, which grew 36% from a year ago. As shoppers have pulled back, Target has been stuck with an inventory glut. That has hurt its profitability.

But Target’s inventory levels are leaner than they were a year ago and Target is marking down fewer products. Target’s profit also grew from lower freight and supply chain costs.

Still, shoppers have become more cautious in the face of inflation, higher interest rates and the resumption of student loan repayments.

This is a developing story. It will be updated.