Target Corp reported a higher-than-expected quarterly profit on Tuesday, but remained cautious about the fourth quarter given a budding holiday season price war.

Wal-Mart Stores Inc is slashing prices every week until Christmas, and not to be outdone by its much larger rival, Target, the No. 2 U.S. discount retailer, is matching those sale prices on everything from toys to books and DVDs.

Target's aggressive price cuts may also continue right upuntil Christmas. Websites claiming to have copies of Target's advertising circular for Black Friday, the day after Thanksgiving, say the retailer will be selling a coffeemaker and a slow cooker for $3 each.

A company spokesman said Target is unable to confirm the accuracy of pricing information posted online.

Target's profit for the third quarter that ended October 31, rose to $436 million, or 58 cents per share, from $369 million, or 49 cents per share, a year earlier.

Analysts, on average, were expecting earnings of 50 cents per share, according to Thomson Reuters I/B/E/S.

With the results, Target broke a streak of eight consecutive declines in quarterly profit.

Sales rose 1.4 percent to $14.79 billion, while sales at stores open at least a year, a key retail gauge known as same-store sales, fell 1.6 percent.

In its credit card segment, profit increased to $60 million from $35 million, helped by improved portfolio performance.

Target's business faltered in the recession as shoppers stopped splurging on its trendy wares and fell behind making payments on their credit cards.

To get business back on track, Target has slashed inventory, cut costs, set aside funds to cover bad credit card accounts, and begun rolling out P-fresh -- adding an expanded selection of grocery items in certain stores.

Its shares slipped 11 cents to $50.18 on the New York Stock Exchange in early trading.

(Reporting by Nicole Maestri, editing by Maureen Bavdek)

Target Walmart