Chris Horvers: Chris Horvers, JPMorgan. So my first question is you sit at these apex of different general merchandise categories that were major COVID winners. So as you peel away and look at the unit trends that you saw in the fourth quarter, are there signs of any stability, whether it’s TVs or computing or decorative home or athleisure? Is there anything that has given you some encouragement to say like maybe we’re getting to the bottom of the curve? And then my second question is around the first quarter operating margin guide versus what’s implied for the fiscal year. It doesn’t look like the implied is maybe like 4.5 to 5 on the fiscal year. It’s not much better than the midpoint of the first quarter, but yet they’re bigger quarters, you’re going to lap all these headwinds from the freight side, which should be coming down, the markdowns, the salvaging.
So why isn’t — and presumably consumables inflation comes down to the relative performance? Improves, why wouldn’t you see better operating margin performance over the year relative to 1Q?
Brian Cornell: Christina, you want to unpack some of the trends we’re seeing in discretionary categories?
Chris Horvers: Yes. The most consistent theme is where there’s innovation, there’s still relevance. And so consumers are finding them. Social media, of course, is a great way for consumers to become connected to new products and new ideas, and you’ll be surprised things will spike quickly. And sometimes we don’t see them coming in other times, we’re well prepared. But I would tell you that there are pockets of those in every business. And so right now, we’re planning the discretionary categories at an aggregate level more cautiously, but we’re certainly leaning into market share opportunities where we see them. We believe that there’s opportunity in the home business, and we’ll be launching more brands in the back half of this year, both on the national and owned brand side that have the potential to grow share in that category.
We’re seeing it definitely in Apparel, where you get the right fashion moment in the right fashion trend. It doesn’t matter that they bought a lot of performance where over the last couple of years, they’re still interested in buying new. And so that’s been the most consistent correlation. With that said, we’re also introducing that level of newness and interest in categories like Food & Beverage and Essentials. Our favorite day brand that we’ve launched over the last couple of years, which is a suites brand, has been has seen explosive growth over the last year or two. And this is a place where we’ve taken the liberty to innovate in basic categories, whether it’s cookies or ice cream and so forth and the flavor profiles the way that they brought the items to market have really shown that the guests will engage across the board if we give them a reason to.
Brian Cornell: Chris, if we go back to discretionary categories. You heard us on today, Christina highlighted the fact that in 2022, despite some of the softening trends, we still generated $55 billion of revenue in discretionary categories. One of the things I highlighted this morning during my CNBC interview is I go back to 2019, we’ve grown our discretionary portfolio by almost $14 billion. So we’re going to move forward from a much bigger base and much more relevance in those categories. And to Christina’s point, we know they are going to return to growth over time It’s going to be led by newness and innovation in the near term. But we’re in a much different position going forward than we were pre pandemic. And I think we have much more relevance and credibility in the space than ever before.
