Operator: Thank you. The next question comes from Michael Lasser with UBS. You may go ahead.
Michael Lasser: Good morning. Thank you so much for taking my question. Best of luck to John Mulligan. With sales down around 5% in the third quarter and the guidance calling for a similar decline in the fourth quarter, one of the key debates and using an example is are customers not coming to Target right now, because they’re just not in the market for a coffeemaker as an example, or are they buying that coffeemaker somewhere else? And if the latter is the king, how much more promotional will Target need to become in order to get the customer back?
Brian Cornell: Michael I’m happy to start and then I’ll ask Christina to provide additional color. But one of the things that we’ve called out a number of times now is that there’s tremendous pressure on the consumer’s wallet and the impact of very sticky food and beverage inflation, which compared to pre-pandemic food and beverage prices were up on average 25%. And that’s certainly pressured consumers as they’re making choices and certainly has forced them to make very tough choices when it comes to discretionary goods. We’ve actually seen in the industry seven consecutive quarters where discretionary goods have declined both in dollars and units. So there’s an overall pressure in the marketplace. So you’re seeing a consumer who is focused on managing their budget, buying those household essentials and then carefully shopping for those new items you just mentioned.
But Christina why don’t you give Michael some additional color on what we’re seeing in some of those categories?
Christina Hennington: Yeah. To build on what Brian said certainly when we do have hot promotions the guest is responding. And the fourth quarter is always very competitive and we’ll be very well-positioned with everyday low prices as well as promotions and investments in Circle, our loyalty program. I think the big difference for us this year and this fourth quarter is the amount of newness that we’ve invested in. If there’s one thing that we’ve seen is in an environment where people are making choices and they might have some constraints with their budget, the motivation to buy is really is this going to add value to my life? Is this something that is intriguing and feels relevant or is fashion forward, or is really for me?
And doing more of the same just isn’t going to get it done, which is why we’ve invested in newness. And you’ll see that across the store. You’ll see it as you walk in first thing in our women’s set. It’s right on trend, it’s colorful. The price points are very appealing. You walk around to our seasonal business. Right now you can get everything — your tree skirt to ornaments at a great value. Continue down the path to toys, you’ve got over two-thirds of our toys below $25. And then around the corner of our store to food where you can get not only your Thanksgiving meal for under $25, but all the gifting solutions and special trades for Marks & Spencer only rounded out at Beauty, which has been our strongest business year-to-date and for many years and find gifting solutions at every price point.
So we’re really pleased with assortment we’re putting forward and think this will certainly motivate the guest to buy.
Brian Cornell: And Michael one point to clarify. While we’ve certainly called out the pressure we’re seeing both from an industry standpoint and a Target standpoint in discretionary categories in the third quarter alone, we generated over $25 billion of revenue. And as Michael referenced on a full year basis, we’ll generate over $100 billion of revenue. A significant portion of that comes from discretionary sales and as Christina pointed out much of that’s tied to combining great newness with affordability. And I think we’re well-positioned to continue to perform in those categories. So while we’ve seen some pressure, consumers continue to turn to Target for apparel and home for discretionary categories and items. And I think we’re well positioned with the amount of newness and value we’ll offer during the holiday season.
Michael Lasser: Thank you very much. Then, my follow-up question is Brian over the last couple of years Target has shown that it can drive sales growth. It’s now showing that it can drive profitability. As you look towards 2024 when arguably the consumer is going to continue to face pressure will your priority being on driving better sales performance or sustaining the profitability that Target has been able to achieve this year?
Brian Cornell: Michael, it’s such a great question. And you heard me say this in my prepared comments our focus is on obviously doing both. We’re certainly not satisfied today with our top line performance. And we are laser-focused on improving traffic, on growing our top line and continuing to advance our profitability. So for Target it’s a combination of doing both. And as we finish this year and build our plans for 2024, you’ll see us being focused on driving our top line, building traffic and continue to expand our profitability.
Michael Lasser: Thank you very much and good luck.
Brian Cornell: Thank you.
Operator: Thank you. Our next question is from Edward Yruma with Piper Sandler. You may go ahead.
Edward Yruma: Hey guys. Thanks for taking the questions. John Mulligan, congratulations on all that you’ve done and thanks for all the help over the years. Really just a couple of clarification questions, so Michael, on shrink, I know last year you had a significant accrual in the fourth quarter you said that there’s favorability but just trying to understand the underlying trend. Are you seeing stabilization? And not to conflate two things but I know you did call out kind of more usage of full-service lane, so trying to understand if you kind of at least start to flatten the curve on shrink. And then as a follow-up, on discretionary categories, obviously nice to see the improvement in Apparel, are you planning kind of continued improvement within that negative mid-single comp guide? Thank you.
