Daniel Binder – Jefferies asked: Could give us some color on what your promotional posture will look like this holiday season versus last year?
Kathryn A. Tesija – EVP, Merchandising responded: The fourth quarter is extremely competitive and so far this year our pricing has been spot on.
We’ve been really pleased with how competitive our prices have been.
With our 5 percent rewards, our guests get an even greater deal. We believe it will be competitive this year, just as it has been in the past years. We believe our pricing will measure up.
Binder followed up with the question: Could you give us some color on what to expect PFresh and 5 percent Rewards to contribute now that we’re going to the second holiday season with them? Can you tell us from a sales and margin standpoint?
Douglas A. Scovanner – EVP and CFO responded: With the 5 perent Rewards, we piloted this in Kansas City for a full year before we rolled it out nationally. Kansas City has to see the twinkle in my eye. We’ll always be one year ahead of the rest of the U.S.
In our second year in Kansas City, there has been a pretty meaningful increase year-over-year–not as large as year one–but still quite meaningful. Moving forward for the next four quarters, we still expect a couple of 100 basis points or better year-over-year increase in penetration.
There is seasonality to this program.
The benefit will be lower in quarter four than we expect it to be in each of the first three quarters next year; however, it will continue through year two in all likelihood or well beyond year two in terms of its year-over-year benefit.
PFresh, a smaller benefit and subject to seasonality, makes it less of a contributor in the fourth quarter than in each of the first three quarters. For these two reasons–seasonality in each of those programs–I believe that its more likely our fourth quarter same-store sales could trail the last few quarters of experience by a small amount.
Adrianne Shapira – Goldman Sachs asked: You mentioned changes in management and online. What is the timing in assembling the new teams? How should we be thinking about what the complexion? What sort of skill sets? What Target will look like going forward in the executive ranks?
Gregg W. Steinhafel – Chairman, President and CEO responded: I’m not really going to address the timing of this because it will come when it’s appropriate.
We have a very deep and talented bench.
Clearly, Doug’s retirement (CFO Doug Scovanner) was a planned event and we have great internal team members. We have a team of 355,000 strong, but we’re also going to take an opportunity to look outside and make sure that we get absolutely the best individuals in any of these open positions.
Timing is undefined, but I think the most short-term decision that you’ll hear from us will be filling our multi-channel and dotcom position; the others will come after that.