Target Corporation (TGT)’s Earnings Conference Call Transcript

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We just need a little bit of time here and let the dust settle in Canada and show that things are playing out as we envisioned and that there’s no other potential liability sitting out there for the corporation. We don’t believe there are any but letting that settle a little bit.  Then with the US business performing well, which we believe it is, we’d be in a position to start buying back shares.

Chris Horvers

So now that you’re back down to 1.9, we can start to think about whatever your ebidah growth is in compounding back to the balance sheet through leverage.

Brian Cornell, Chairman and Chief Executive Officer

Yes, that’s the plan.  That’s how we think about it.

Chris Horvers

Okay, perfect.  Thanks very much.

Brian Cornell, Chairman and Chief Executive Officer

Chris, thank you.

Operator

Your next question comes from the line of Simeon Gutman.

Simeon Gutman

Good morning.  One follow up for John, the $500-600 million on cash costs, are you expecting that there will be some positive cash that comes against that or there is none that built in that today and that could be a surprise to it?

John J. Mulligan, Chief Financial Officer

That’s our net expectation.  We have built in a very small recovery, as the largest creditor to Target Canada but that would be not a meaningful portion of that $500-600 million.  So, that is an all in pretty good estimate that we think that’s where we’ll land when everything is all said and done.

Simeon Gutman

And 2015 will bear the brunt of it if not all of it such that there shouldn’t be any more ongoing costs or liability past 2015, meaning nothing into 2016?

John J. Mulligan, Chief Financial Officer

That’s our expectation.  Certainly anything in 2016, we wouldn’t expect to be material.

Simeon Gutman

Okay, and then one for Brian.  This was asked in a couple of ways and I’m expecting to hear that we’re going to get more color in March, but as you think about investments in the US which we’ve mentioned a few time, the modernization etc., have your thoughts changed at all since you joined up until now as you’ve seen the business progress through the holiday season?

Brian Cornell, Chairman and Chief Executive Officer

Again, I don’t think there’s been any major changes from what we’ve talked about over the last couple of quarters.  I think we’re very focused on the five priorities that John and I have been talking about and I think you’re to continue to hear us talk about that for several years to come. So, we are very committed to building out an Omni channel relationship with our guests.  We are going to continue to focus on elevating those very important signature categories that our guests have told us are most important to them. We’ll continue to place the resources and build the capabilities to advance our localization and personalization efforts.  You’ll see us deploy capital around the expansion of smaller formats like City Target and Target Express. We’re certainly going to be looking at cost savings opportunities that we can re-invest in igniting growth and improving our return on invested capital.  So, the focus that we’ve been placing behind those initiatives will only be strengthened now as we place all of our resources against accelerating and building momentum in the US.

Simeon Gutman

Okay, thank you.

John J. Mulligan, Chief Financial Officer

Okay we have time for one more question.

Operator

Our final question comes from the line of Oliver Chen.

Oliver Chen.

Yes, good morning, this is Steven Zaccone, on for Oliver Chin.  In terms of the signature categories, where do you think you’ll have the quickest impact beginning in 2015?

John J. Mulligan, Chief Financial Officer

Well, I talked about and gave you some color around our performance in the 4th quarter.  I’m very pleased with the progress and the performance we saw in apparel and home during the 4th quarter, the continued strength that we have in baby and wellness.  I think you’re going to see us continue to elevate that focus as we go into 2015.  The teams are working right now to make sure we have products that are on trend.

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