Michael Fiddelke: Yes. Just at risk of piling on. We care about economics at the transaction level. We care about the economics at the category level. We care about the economics of the fulfilment path. But the thing that we thought differently about over time is cutting the economics by guests. When we take friction out of the process and make it easier for guests to just call more and more in love with Target. That’s the most powerful economic relationship to be focused on. I think we’ve learned that time and time again, and Drive-Up is a perfect example. On the free cash flow question, we’re not guiding to free cash flow specifically, but we expect material improvement from a free cash flow basis. I touched on some of the drivers.
The first is better profitability. The second is we expect working capital recovery. I mean, our turns slowed. Our supply chain times were longer this year, and that came with working capital investments to make sure we’re getting product here early enough with a volatile supply chain. And so we were running at suboptimal working capital levels through the bulk of 2022. If you move through 2023, I would expect that to improve.
Brian Cornell: I think I’d say a hand up right in this first row. In fact, a few will start right in the middle.
Simeon Gutman: Simeon Gutman, Morgan Stanley. You mentioned that fulfillment costs, I think, on digital are down 40% since 2019. Is there any merit to the fact that your $110 billion sales organization and that you’ve suddenly become less efficient such that this path back to 6% requires investments? And so the ultimate question is how much of getting back is the pure recapture of lapping markdowns, freight costs shrink versus how much you have to invest to get back to that level?
Brian Cornell: Yes, I’m happy to start. It’s a piece of both. We’ve seen some structural changes in the business. We talked about shrink as being one, and that’s not one that we expect to turn in a different direction quickly. But the efficiency we’ve been able to drive, given how efficient stores are as a fulfillment hub is a huge advantage to us when it comes to digital fulfillment. It’s fast for the guest. The economics of it work for us, and we build engagement like we talked about before. Separately, we continue to be focused, as Mike shared, on the efficiency work. And that’s important work. We want fuel from efficiency to keep investing in growth of the business. And that will also play a role in getting us to the right profit outcome that we should have as a $100-plus billion retailer.
Michael Fiddelke: Sorry, Brian. I’d add on as it relates to capacity, particularly because you brought up fulfillment, we’ve seen our sales productivity in the store increased by 37% over the last 3 years. Brian mentioned that. We still have — so an average store has gone, call it from $40 million to $55 million over the last 3 years. We still have stores that do over $100 million and do well over $100 million. The top quartile does significantly more than the median store. So we have tons of capacity sitting out there unused in our stores and the ability to turn faster again, back to we need to improve how we move inventory and how quickly we move inventory, which we’re on the journey on, but our stores have significant capacity to continue to drive both in-store sales and our digital business.
Brian Cornell: Why don’t we go in the back?
Unidentified Analyst: Brian, I’d like to talk a little bit about the trade down impacts you’re saying, are you a net gainer or donor on the trade down. And to the extent you are losing some share there, do you have — does your customer database allow you to adopt win-back strategies targeted those people who may have traded out?
Brian Cornell: Christine, do you want to talk about what we’re seeing as far as guest shopping behavior?
