Greg Melich: Really two questions. John, maybe, Michael, if you could help us on some of the other margin drivers that you see, particularly shrink, you called out is still the headwind. What do you do to actually fix that? I’m also thinking credit profitability now that some of the delinquency rates and other charges are changing? And then maybe bigger picture, Brian, how important is keeping traffic? You’ve gained so much traffic in customer engagement. How do you think about pulling that lever versus promotion and margin and expect more pay less? Is it critical that traffic keeps growing no matter what? Or could it slip 1% or 2% just given your mix? How do you think about pulling those levers as we go through this uncertain year or 2?
Brian Cornell: Michael, why don’t I start with the focus on traffic. And as we sit here today, and you’ve heard me talk about this for years and years now. We think one of the most important indicator of a retailer’s health is the traffic indicator. And that’s why we feel so good about the fact that we’ve had 23 consecutive quarters where we’ve seen comp store sales growth, and it’s all on the back of traffic. We’re getting more footsteps into our stores, more visits to our site, greater engagement. Our guests are spending more with us. They are rewarding us with more trips and they’re shopping more categories. And we think that’s critically important. And to John’s point, while we’ve seen a significant lift over the last few years in our sales per square foot, we know there’s still potential to go further.
And as we think about capabilities like Target Circle, our ability to connect with those guests and deepen their relationship, introduce them to newness in our assortment in other categories. We think we have a tremendous opportunity in front of us. But sitting here today, I continue to believe looking at trips is critically important. And in an inflationary environment that we’re working in today, it’s why we’re so laser-focused on unit share improvement because those things are going to be really important as we move to a more normalized environment because the guest is turning to us more frequently for all of their needs, both frequency and discretionary, they’re shopping more categories. So making sure we’re looking at units carefully, looking at trips to me as a key indicator of the health of our business today and why we’re so excited about the potential in front of us.
John Mulligan: And maybe for the second part of your question, Greg, when it comes to margin and profitability in general, it starts with what Brian did. — the strength of the top line is going to matter a lot, and we feel encouraged by the traffic trends that we’ve seen. In terms of the other structural buckets, you hit on a few of them, talked about shrink. We’ve seen a normalization in some of the credit metric watch, I think consistent with what you’d see in the industry. I wouldn’t put that highest on the list of factors for next year, but it’s one we’ll stay close to it and monitor. We’ve also talked in some of what we covered earlier today. We expect promotional environment next year. We see guests responding to promotion in the fourth quarter, and we expect that, that’s something that could continue.
We’ll also have some tailwinds on the margin side though. I mean we’re anniversary-ing a level of markdowns in salvage that was extremely typical for us, and we want to make sure we recover that. We’ve seen some improvement in supply chain and freight. And so as we anniversary some of the peaks from last year, that should be a good guy on the margin line. And so it’s all of those variables that we factored into the guidance we gave today.
