U.S. retail giant Target saw its revenues rise 21 percent year-on-year to $28.34 billion in the quarter ending in January, boosted by a surge in online sales and store traffic, and driven by strong holiday demand.

The retailer beat analysts' forecast of $27.48 billion in sales for the holiday quarter, and also trumped earnings estimates, reporting adjusted earnings per share of $2.67, as against $2.54 projected by analysts surveyed by Refinitiv.

Meanwhile, net income rose 66 percent to $1.38 billion from $834 million one year ago.

Target's comparable sales, a key metric watched closely by Wall Street, rose 20.5 percent year-on-year, surpassing estimates of a 16.8-percent rise, according to StreetAccount.

Sales through same-day services grew 212 percent, while sales through the curbside pickup service surged more than 500 percent.

Full-year sales jumped by more than $15 billion in 2020, which was larger than the combined sales growth of the past 11 years.

In an interview with CNBC, Target CEO Brian Cornell said the retailer saw "a surge in traffic in our stores" in January, with sales growing across all merchandise categories.

The rollout of stimulus checks in January also boosted online sales.

The retailer declined to provide a forecast for the 2021 fiscal year, citing continued uncertainty amid the pandemic, but said it will invest $4 billion every year for the next several years to expand stores and boost online services.

Analysts have cautioned that the months ahead will be challenging for retailers, as COVID-19 vaccine rollouts shift consumer behavior to pre-pandemic levels.