Target shoppers searching for after-Christmas deals ultimately bought food and beauty products in January as payroll tax increases cut paychecks last month.

The Minneapolis-based retailer said Thursday that its same-store sales jumped 3.1 percent in January, an improvement over December when sales remained flat. Target's January results, which were compared with the same month last year, outpaced Wall Street's expectations of a 1.7 percent gain.

Still, analysts and company officials said shoppers spent ­conservatively, with such low-margin items as food and beauty merchandise making up the bulk of the sales increase. "Our guests continue to shop with discipline in the face of a slow economic recovery and new pressures, including recent payroll tax increases," Target Corp. CEO Gregg Steinhafel said in a statement.

Burt Flickinger III, managing dir­ector of Strategic Resource Group in New York, said Target's rise in food and beauty sales showed that the retailer may be gaining on its biggest competitor, Wal-Mart. In its third national survey of holiday shoppers in December, Wal-Mart customers repeatedly complained about sale items that sold out too quickly. Some shoppers were so upset, they promised to avoid Wal-Mart and instead head to Target and other stores to avoid future hiccups, Flickinger said.

Flickinger, who owns stock in both Target and Wal-Mart, added that Target extended its competitor price-matching policy on food and health products in early January, which also helped drive sales. Home decor also sold well for Target last month, with an increase in the low single digits.

Thomas Simons, vice president and money market economist at Jeffries & Co., said he's not surprised that Target's home goods performed well.

"The recovery is accelerating in the housing sector. So when you see an acceleration in home sales and construction, people will need to come out and buy home goods. This creates a trickle-down effect," Simons said. "Our view is that the housing sector recovery will continue to mend and that will help retailers, including Target."

No more monthly reports

This will be Target's final monthly sales report. By ending the practice, Target is jumping on an industry trend led by Wal-Mart, which decided during the Great Recession to communicate results only on a quarterly basis.

Same-store sales are a key indicator of a retailer's financial health because it compares results of stores open at least a year.

Macy's, Nordstrom, Kohl's and other retailers also have announced that they will cease providing a monthly view into store sales.

The Retail Metrics firm reported that overall same-store sales for 20 retailers it tracks rose a "surprisingly strong" 4.5 percent in January, over an expected 2.8 percent gain. Department stores led the pack with an 8.1 percent increase, the largest gain since November 2007, according to Retail Metrics.

Menomonee Falls, Wis.-based Kohl's Corp. said that its efforts to clear seasonal merchandise and a 59 percent surge in e-commerce sales last month helped bring its same-store sales up by a hefty 13.3 percent.

Macy's Inc. was so heartened by its "outstanding" 11.7 percent advance in January that it raised its earnings forecast for its fourth fiscal ­quarter, which it will report on Feb. 26.

Bloomberg News contributed to this report. • 612-673-7335 • 612-673-7725