A sign with the new logo of the discount store Aldi placed in front of a branch in Schwetzingen, Germany, 03 November 2017. Photo: Sina Schuldt/dpa (Photo by Sina Schuldt/picture alliance via Getty Images)
A sign with the new logo of the discount store Aldi placed in front of a branch in Schwetzingen, Germany, 03 November 2017. Photo: Sina Schuldt/dpa (Photo by Sina Schuldt/picture alliance via Getty Images)
PHOTO: Sina Schuldt/picture alliance via Getty Images
Now playing
01:48
These are the unexpected winners of the grocery wars
PHOTO: Orangetheory Fitness
Now playing
02:13
This gym is actually opening studios during the pandemic
Now playing
02:24
How holiday spirit is surging despite the Covid-19 pandemic
NEW YORK, NEW YORK - NOVEMBER 19: A view of the window display as Macy
NEW YORK, NEW YORK - NOVEMBER 19: A view of the window display as Macy's Herald Square unveils Give, Love, Believe 2020 Holiday Windows on November 19, 2020 in New York City. (Photo by Eugene Gologursky/Getty Images for Macy's)
PHOTO: Eugene Gologursky/Getty Images North America/Getty Images for Macy's
Now playing
00:56
Macy's unveils holiday window display with gratitude theme
PHOTO: CNN/Target/Design by John General
Now playing
02:36
It's official: Black Friday is irrelevant
Now playing
02:23
Party City CEO: Consumers still want to celebrate together
NEW YORK, UNITED STATES - 2020/07/08: People wearing face masks shopping inside a retail store in Manhattan as the city enters phase 3 of reopening amid the coronavirus pandemic
As New York City enters phase 3 of reopening retail stores for indoor shopping, restaurants have been postponed for indoor dinning. The U.S. Department of Health recorded a total of 3,219,999 infections, 135,822 death and 1,426,428 recovered since the beginning of the outbreak. (Photo by Braulio Jatar/SOPA Images/LightRocket via Getty Images)
NEW YORK, UNITED STATES - 2020/07/08: People wearing face masks shopping inside a retail store in Manhattan as the city enters phase 3 of reopening amid the coronavirus pandemic As New York City enters phase 3 of reopening retail stores for indoor shopping, restaurants have been postponed for indoor dinning. The U.S. Department of Health recorded a total of 3,219,999 infections, 135,822 death and 1,426,428 recovered since the beginning of the outbreak. (Photo by Braulio Jatar/SOPA Images/LightRocket via Getty Images)
PHOTO: Braulio Jatar/SOPA Images/LightRocket/Getty Images
Now playing
01:38
US retail sales improved in September
PHOTO: thehouseofdrew.com
Now playing
02:01
Justin Bieber's footwear collaboration overwhelms site
PHOTO: Walmart
Now playing
01:01
See what's new inside Walmart stores
WHEATON, MARYLAND - APRIL 16: Customers wear face masks to prevent the spread of the novel coronavirus as they line up to enter a Costco Wholesale store April 16, 2020 in Wheaton, Maryland. Maryland Governor Larry Hogan ordered that all people must wear some kind of face mask to protect themselves and others from COVID-19 when on public transportation, grocery stores, retail establishments and other places where social distancing is not always possible. (Photo by Chip Somodevilla/Getty Images)
WHEATON, MARYLAND - APRIL 16: Customers wear face masks to prevent the spread of the novel coronavirus as they line up to enter a Costco Wholesale store April 16, 2020 in Wheaton, Maryland. Maryland Governor Larry Hogan ordered that all people must wear some kind of face mask to protect themselves and others from COVID-19 when on public transportation, grocery stores, retail establishments and other places where social distancing is not always possible. (Photo by Chip Somodevilla/Getty Images)
PHOTO: Chip Somodevilla/Getty Images
Now playing
02:32
How masks are reshaping the face of the retail economy
3119 E Third Street Dollar General in Dayton, OH on March 12, 2020.
3119 E Third Street Dollar General in Dayton, OH on March 12, 2020.
PHOTO: Maddie McGarvey for CNN
Now playing
06:07
Dollar General's business is booming. It's also vulnerable to crime, police say
Now playing
03:01
How private equity is gutting retail
Now playing
01:55
All retail bankruptcies are not the same. Here's what you need to know
Now playing
02:44
Is T.J.Maxx recession-proof?
LOS ANGELES, CA - APRIL 10:  Customers carry bags from  Bed Bath & Beyond store on April 10, 2013 in Los Angeles, California. The home goods retailer is expected to release fourth-quarter earnings figures after the closing bell.  (Photo by Kevork Djansezian/Getty Images)
LOS ANGELES, CA - APRIL 10: Customers carry bags from Bed Bath & Beyond store on April 10, 2013 in Los Angeles, California. The home goods retailer is expected to release fourth-quarter earnings figures after the closing bell. (Photo by Kevork Djansezian/Getty Images)
PHOTO: Kevork Djansezian/Getty Images
Now playing
00:58
Why Bed Bath & Beyond is in big trouble
A Kohl
A Kohl's Corp. store stands in Concord, California, U.S., on Tuesday, Feb. 24, 2015. Kohl's Corp. is expected to release earnings figures on Feb. 26. Photographer: David Paul Morris/Bloomberg via Getty Images
PHOTO: David Paul Morris/Bloomberg via Getty Images
Now playing
01:25
Kohl's needs to reinvent itself. Are Aldi and Amazon the key?
(CNN Business) —  

The winners and losers of America’s great retail shakeout are becoming clear. Target and Walmart are definitely winners. Just about every traditional department store is losing.

Sales at Target (TGT)stores open at least a year increased 3.4% during the summer quarter and profit rose, Target (TGT)said Wednesday. Target (TGT)beat Wall Street’s predictions for the recent quarter and raised its profit forecast for the rest of the year.

The results come on the heels of Target’s best year in more than a decade. Investors drove up Target stock around 18% in early trading Wednesday. Shares hit a record high.

Target said clothing sales increased more 5% last quarter and that it is gaining market share in the category. Those are clear signs that Target’s growth is coming at the expense of apparel retailers. Target has introduced new clothing brands for men, women and kids in recent years and displayed them more prominently in stores.

“There are clear winners and unfortunately losers in retail today,” Target CEO Brian Cornell said on a call with reporters Wednesday. “We’re obviously taking share from other retailers that have been closing stores or haven’t had the ability to invest in the needs of today’s consumer.”

Wall Street has punished retailers that signal weakness in their businesses.

Macy’s (M) last week said that sales at stores open at least a year inched up but profit fell 48% during its most recent quarter. Macy’s (M) lowered its expectations for the remainder of the year, dragging down its stock. JCPenney (JCP), which is trading at below $1 a share, reported last week that sales dropped 9% during its most recent quarter, continuing its steady decline.

Even Kohl’s, a favorite of retail investors because of a partnership with Amazon and a creative approach, reported a slump last quarter. Sales declined 2.9% at stores open for at least a year. The Gap (GPS) and L Brands (LB), the parent of Victoria’s Secret, have also been hit hard. Both companies report earnings this week.

Target, Walmart and discount clothing chains such as TJMaxx are gaining market share against these retailers. Walmart and TJX (TJX), the parent of TJMaxx and Marshalls, has reported a string of sales growth in recent years.

Target and Walmart operate stores away from malls, an advantage because foot traffic is slowing at malls around the country. Macy’s and Penney, however, have heavy exposure to malls. Neither chain has put up as much capital investment to remodel stores as Walmart or Target.

Walmart is close to seven times as big as Target in terms of sales, but the two chains are both able to use their size and scale in the market to drive down prices on a variety of merchandise. Department stores like Macy’s, Kohl’s and JCPenney are much smaller and sell mainly clothes, where a proliferation of options have cropped up online and from specialty brands.

Retail bankruptcies such as Sears and Toys “R” Us and a strong consumer economy have also benefited the big-box chains.

“It’s still a very solid and healthy consumer environment,” Cornell said. “We’re well positioned to take advantage of that.”