And that’s our ability to shift our business and our categories in step with our guests. If they need to prioritize Food and Essentials, we’ll lean into those categories. But as you heard from Christina, in a year when discretionary spending was down, our discretionary categories generated $55 billion in sales. Our guests today are responding to newness. They’re celebrating seasons as we just saw at Valentine’s Day. They’re eager to be out in our stores and enjoying that guest experience, and we’re seeing it in our traffic growth. And we know they really value affordable joy. So we remain fully committed to our multi-category portfolio to essentials and to our discretionary categories. And as our guests lean back in discretionary categories over time, we’ll be ready to flex into those trends, building substantially on the near-term plans we share today.
We know that will happen. But in the meantime, we’re moving forward thoughtfully. We’re doubling down on retail fundamentals. We’re finding fuel for further growth through efficiency. And while we’re emphasizing prudence in our near-term performance, I am incredibly positive about the long-term potential and our ability to translate both in deposit outcomes for all stakeholders, including shareholder returns over time. So I want to close by thanking our team as a tune in from around the globe, and thanking all of you for staying with us on this journey. And with that, I’ll ask Christina, John and Michael to come back, and we’ll open it up for your questions. All right. I see hands already going up. We’ve got paddle runners around the room. As I call on you, I might ask you just to pause, introduce yourself and ask your question.
So why don’t we start right here. Michael?
Q – Michael Lasser: It’s Michael Lasser from UBS. A few questions. Number one, last year at this meeting, you had talked about an 8% operating margin. So what has changed this year to — last year to this year structurally with the business to make it a lower operating margin business? Two, what is it going to take to get to the 6% operating margin by next year? And third, Brian, sorry, did you look at the experience over the last few quarters and say, “Hey, we missed what we expected it to do. So let’s take a more conservative, cautious view on how we’re planning this year, leaving potential room for upside?
Brian Cornell: Michael, why don’t I ask you to start, and then I’ll come back and answer the back half of that question.
Michael Fiddelke: Yes. So we’ve got a journey in front of us on the profit front, and 2023 plays an important role in stepping back to where we expect to get over time. But we guided to a wide range today, even at the low end, we expect over $1 billion in net income growth year-over-year. And we want to execute that plan, that’s first and foremost. Under the right set of conditions, we think we can get to 6% in 2024. And then we’ll take it from there. But we’ve got the next couple of years squarely in focus because we’ve got work to do to recover our performance from last year. As we think about what’s optimal over time, I’ll go back to what I said in remarks, we want the optimal rate that maximizes profit dollar growth over time.
And I think there’s still a few variables that will click into place between now and when we have that conversation. — in the quarters and months to come. But we want to be focused on dollars in dollar growth, philosophically, that’s the thing that we leave the group with today.
