Target Corporation (TGT)’s Earnings Conference Call Transcript

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Below is transcript of the Target Corporation (NYSE:TGT)’s conference call, held on Thursday, January 15, 2015, at 11:30 am EST.

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Target Corporation (NYSE:TGT) is engaged in providing everyday essentials and fashionable, and differentiated merchandise at discounted prices. The Company operates in two segments: U.S. and Canadian. The U.S. Segment includes all of its the United States retail operations, including digital sales. The Canadian segment offers retail operations in Canada. The Company’s owned brands include Archer Farms, Gilligan & O’Malley, Sutton & Dodge, Simply Balanced, Market Pantry, Threshold, Boots & Barkley, Merona, up & up, CHEFS, Room Essentials, Wine Cube, Circo, Smith & Hawken, Xhilaration, Embark and Spritz, among others.


Company Executives:

 John Hulbert, Vice President, Investor Relations

Brian Cornell, Chairman and Chief Executive Officer

John J. Mulligan, Chief Financial Officer



Matt Nemer, Wells Fargo Securities, LLC – Analyst

Scott Mushkin, Wolfe Research – Analyst

Wayne Hood. BMO Capital Markets – Analyst

Greg Melich, Evercore ISI – Analyst

Matthew Fassler, Goldman Sachs – Analyst

Peter Benedict, Robert W. Baird & Company, Inc. – Analyst

Robby Ohmes BofA Merrill Lynch – Analyst

Michael Lasser UBS – Analyst

Chris Horvers JPMorgan – Analyst

Simeon Gutman Morgan Stanley – Analyst

Steven Zaccone Cowen and Company – Analyst



Welcome to today’s conference call with Target Corporation. During the presentation, all participants will be in a listen only mode.  Afterwards, we will invite you to participate in a question and answer session.  At that time, if you have a question, you will need to press *1 on your telephone. As a reminder this conference is being recorded, Thursday, January 15th, 2015.  I would now like to turn the conference over to Mr. John Hulbert, Vice President, Investor Relations.  Please go ahead, sir.


John Hulbert, Vice President, Investor Relations

Thanks. Good morning, everyone, and thank you for joining us on today’s conference call. On the line with me today are Brian Cornell, Chairman and Chief Executive Officer; and John Mulligan, Chief Financial Officer. This morning Brian will provide his insights into our difficult decision to exit the Canadian market. Then John will provide more detail on the financial implications of this decision and close with an update on recent trends in our US business and our improved fourth-quarter outlook for US financial results. Following their remarks, we’ll open the phone line for a question-and-answer session.


As a reminder, we’re joined on this webcast and conference call by investors and others who are listening to our comments via webcast. Following this conference call, John and I will be available throughout the day to answer any follow-up questions you may have. Also as a reminder, any forward-looking statements that we make today are subject to risks and uncertainties, the most important of which are described in our SEC filings. Finally, in these remarks we refer to adjusted earnings per share which is a non-GAAP financial measure. Information about GAAP EPS is included in this morning’s press release which is posted on our investor relations website. With that, I’ll turn it over to Brian for his comments on today’s announcement. Brian?


Brian Cornell, Chairman and Chief Executive Officer

Thanks, John, and good morning to all of you. John Mulligan and I plan to share some brief prepared remarks and spend the majority of our time answering your questions.

As I mentioned in this morning’s press release, the decisions we’re announcing today were not made lightly. In my career, I have participated in multiple turnarounds and I came to Target expecting to find an appropriate path that would allow us to continue operating in Canada. I believed that with the appropriate changes to our operations, assortment and pricing we’d have Target Canada on a path to profitability within the next few years and my strong preference was to develop a plan to fulfill that vision. I realized the solution would not be simple or easy. Since I knew from my time at Pepsi that Target’s entry into Canada had been very challenging, and that we had disappointed the high expectations of our Canadian guests. However, in my time here at Target, I’ve developed a better understanding of just how deeply our entry disappointed Canadian shoppers.

So in addition to operational questions regarding our ability to be in stock with the right assortment at the right prices, I came to understand that we needed to see meaningful improvement in the sentiment of Canadian shoppers which would translate into traffic and sales. We knew the holiday shopping season would serve as a key barometer of our progress. We had undertaken a massive effort to ensure that we enter the season with in stocks at an all-time high. And we have added approximately 15,000 more items to our assortment compared with a year ago. In addition, we had implemented changes to our pricing to ensure both regular and promotional prices were appropriate in the markets across the country, and we had a compelling Canadian holiday marketing campaign.

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