Target is bucking the trend of companies padding their profits amid rising inflation. Investors are punishing them for it, but customers seem to appreciate it.

• Target reported third-quarter earning growth that was driven entirely by increased sales.
• Unlike most major corporations this year, Target has resisted the push to widen its profit margins.

Rising prices from inflation often serve as cover for companies to not just pass cost increases along to customers, but boost their profit margins as well.

Many major retailers and consumer-products companies have reported better-than-expected profits this earnings season, due in large part to their ability to charge customers more for the same stuff.

But Target on Wednesday bucked that trend, even though it reported double-digit sales growth for the third quarter. Sales grew by nearly 13% over the same period last year, driven "entirely" by customers making more purchases.

To put that into context, roughly two-thirds of the largest publicly traded US companies have reported better profit margins this year than the same period in 2019, The Wall Street Journal found, citing FactSet data. Nearly 100 of those were performing at least 50% better this year than in 2019.

Target, meanwhile, saw its margins decline slightly as the company absorbed higher costs from supply-chain disruption and labor challenges that have posed difficulties for all sorts of companies this year.

Although the company beat earnings expectations, investors and analysts were less than pleased with the diminished profitability, and the share price fell by about 5% following the results.

On the earnings call, the majority of analysts peppered Target management with questions about when the company would join the club of companies taking advantage of this opportunity to hike prices and boost margins.

"You've heard us say a number of times already today: we're investing in growth. We're investing to maintain and continue to build market share positions," CEO Brian Cornell said in response to the fourth question on the subject of profit margins.

"We're a company that's going to continue to invest in growth, do the right thing for our team, the right thing for our guests, and utilize all of our assets to continue to build on the momentum that we have today and build market share of our key categories," he added.

While investors and analysts may not share Cornell's enthusiasm for top-line sales, customers appear to like it a lot.

Last year, sale growth was powered by customers buying more stuff in fewer trips. This year, they're making more trips, but their average shopping basket has barely changed.

That growing customer loyalty could prove especially useful for the company as the challenges of this economic recovery continue to evolve.