Target Corporation (TGT)’s Earnings Conference Call Transcript

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That was a very important driver of our program.  We feel very good about how the ship from store will complement our overall online offering.  Our guests took advantage of shopping online and picking up at store, particularly as we got very close to the Christmas Eve period.

So, all three of those levers are working quite well for us and we see the opportunity to continue to build and further the relationship with the guests and allowing them to shop in store and have a great experience, provide them the convenience of shopping online and picking up in store and then sweating our assets and using our stores as flexible fulfillment centers and meeting the needs of our guests from our existing store base.  That’s working well.  It’s still a very small part of our business but as we go forward we think this is going to be very important part of our overall growth program.

Greg Melich

Is it fair to say that online could have been half the comp of the 4th quarter?

Brian Cornell, Chairman and Chief Executive Officer

Not quite half the comp but it will have as we think about our 3% comp, it’s going to have a meaningful impact on the overall growth.  Right now, Greg, I would think about 1% of the comp coming from the acceleration of our online business.  So, an important contributor to our growth rates during the holiday period.  And as John mentioned, continuing in January.

Greg Melich

That’s great.  Thanks a lot.

Brian Cornell, Chairman and Chief Executive Officer

Thank you.

Operator

Your next question comes from the line of Matthew Fassler.

Matthew Fassler

Thanks a lot and good morning to you.  My first question relates to thinking about the cadence of sales in the 4th quarter relative to the timing of the breach.  I know that you had indicated last year that your holiday had actually gone reasonably well until the reality of the breach surfaced and was made public.  I could ask I guess in terms of multiyear stacks or in terms of how the acceleration of your business tracks compared to a year ago but what would we see in terms of the cadence, I guess with or without thinking about the impact of the breach a year ago?

John J. Mulligan, Chief Financial Officer

Sure.  Hi, Matt.  I think certainly as we got further into the breach and where we are now it becomes difficult to desegregate what went on or what’s driving the business.  What I would tell you is the cleanest view we have is of November where we had a very strong November last year and we had a very healthy November this year.  In simple words, we camped the comp and felt really good about that.

And as Brian mentioned, we feel really good about where January is today.  There was a lot going on last January.  There was the breach.  We had weather but even as we look at some of those potential impacts were last year, we feel good about the underlying strength of the business as it stands today.  Importantly, as we said, the digital business never really experienced an impact related to the breach and we’ve seen strong results in the digital business all season long and that continues into January.

Matthew Fassler

Thanks for that.  Then, a couple of follow ups as we think about the financial implications to Target from the Canadian exit.  First of all, just to make sure that, we kind of dealt with this in Greg’s question, as we think about your leverage ratios now, should we be using Target Inc. balance sheet and ignoring from a all cam basis the impact of Canada?  Just thinking about what you have for continuing ops?

John J. Mulligan, Chief Financial Officer

That’s right and the one thing I would remind, because this has come a few times today already, a reminder that as those leases come off, there is $1.2 billion of debt that comes off our balance sheet with it and that’s certainly in the pro forma statements. That’s an important piece not to miss.

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