Ladies and gentlemen, thank you for standing by. Welcome to the Target Corporation's Second Quarter Earnings Release Conference Call. [Operator Instructions] As a reminder, this conference is being recorded Wednesday, August 17, 2011. I would now like to turn the conference over to Mr. Gregg Steinhafel, Chairman, President and Chief Executive Officer. Please go ahead, sir.

Thank you. Good morning, and welcome to our 2011 Second Quarter Earnings Conference Call. On the line with me today are Kathy Tesija, Executive Vice President of Merchandising; and Doug Scovanner, Executive Vice President and Chief Financial Officer. This morning, I will provide a high-level summary of our second quarter results and strategic priorities going forward, and Kathy will discuss category results, guest insights and upcoming initiatives. And finally, Doug will provide detail on our second quarter financial performance and outlook for the rest of the year. Following Doug's remarks, we'll open the phone lines for a question-and-answer session. As a reminder, we're joined on this conference call by investors and others who are listening to our comments today via webcast. Following this conference call, John Hulbert and Doug 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 this morning are subject to risks and uncertainties, the most important of which are described in our SEC filings. We are very pleased with Target's second quarter financial results, which we released earlier this morning. We earned $1.03 per share in the second quarter, up 11.5% over last year's second quarter. This performance was a result of strong profit generation by our U.S. businesses, which more than offset $0.05 of dilution related to our ongoing investments in Target's Canadian segment. So far this year, earnings per share are up more than 10%, overcoming both dilution from Canada and the challenges of a volatile and sluggish economic environment. As expected, the pace of our sales growth accelerated meaningfully in the second quarter. Across the country, every region experienced a healthy increase in comparable store sales. In total, our second quarter same-store sales increase of 3.9% is the strongest…

Thanks, Gregg. We're very pleased with both the mix and pace of our second quarter sales. Within our assortments, some categories have been strong all year as guests continue to respond to our traffic-driving strategies and increase their shopping in areas like Grocery, Healthcare and Household Essentials. We've also seen consistent strength in Beauty, where guests are responding through our differentiated assortment, particularly in our remodeled stores. More notably in the second quarter was the improvement in sales trends of discretionary categories like Apparel, Home and Hardlines. Each of these areas experienced stronger same-stores sales compared with the first quarter. In addition, sales of weather-related items in every part of the sore accelerated meaningfully in June and July, as more seasonable weather patterns emerged across the country. This improved sales trend created better sell-through in markdown-sensitive categories, helping our gross margin for the quarter. Apparel performed very well in the second quarter, led by Performance Active Wear, which continues to reflect rapid growth of the C9 by Champion brand. In addition, women's, men's and kids apparel each experienced healthy increases. Last year in kids, we took prices down to ensure we continue to offer a compelling value relative to the marketplace, creating a temporary headwind in our dollar sales even while unit comps stayed strong. We believe these investments in price paid off as we've gained market share in this key area and dollar comps are once again increasing. We continue to see steady improvement in our sales trends in Home. Second quarter sales in every area of Home were stronger than the first quarter, with Housewares continuing to lead the way. Seasonal sales have been another bright spot, and we're pleased with early reads on Back-to-School supplies. In Hardlines, the most notable change has occurred in Electronics. Tablet sales,…

Thanks, Kathy. This morning, I'll provide additional detail on Target's second quarter results and provide more detail surrounding the third quarter and full year EPS guidance we disclosed earlier today. In addition, I'll bring you up-to-date on the progress we continue to make toward our significant Canadian market entry in 2013 and our progress toward a sale of our accounts receivable. In our last quarterly call, I described the 3 things that would need to happen for us to achieve or exceed the then-current EPS consensus estimate of $1 for the second quarter. At that time, I characterized second quarter EPS of $1 as achievable but above the midpoint of a reasonable range of expectations. Specifically, I said that to meet or exceed $1, we would need to enjoy a meaningful acceleration in the pace of our same-store sales growth from our first quarter experience, and we would need to sustain a healthy U.S. Retail segment EBITDA margin rate of 10% or more, and we would need to again deliver pretax ROIC of 20% or more in our Credit Card segment. I'm delighted to report that our actual second quarter results met or exceeded each of these 3 performance benchmarks. And as a direct result, we delivered EPS of $1.03, representing 11.5% growth from last year's record $0.92. This rate of growth in our consolidated results was even more impressive, given that it was net of about $0.05 of EPS dilution from the results of our Canadian business segment, in line with our expectations. In our U.S. Retail segment, our pace of comparable store sales growth rose to 3.9%, compared with our first quarter growth of 2.0%. In this segment, our second quarter EBITDA and EBIT margin rates were 10.3% and 7.2%, respectively. Similarly, year-to-date, these rates were 10.2% and…

As I mentioned earlier, we're very pleased with our financial performance in the first half of 2011, and we're planning on delivering strong results in the fall season. We believe that a focus on both sides of our Expect More Pay Less brand promise will prepare Target to perform well in a variety of economic environments. One final note. At tomorrow's financial community meeting in New York, we'll extend our outlook beyond 2011, outlining our strategic initiatives while providing additional detail on our longer, long-term financial goals. For those of you unable to attend, we'll webcast both the remarks and visuals live. That concludes today's prepared remarks. Now Doug, Kathy and I will be happy to respond to your questions.

[Operator Instructions] Your first question comes from the line of Jeff Klinefelter with Piper Jaffray.

Kathy, just a couple of questions for you or you and Gregg. In terms of the upcoming holiday season, could you talk more specifically about opportunities that you see for share gains? Given last year's performance, I know December, as a month, was slower in total retail sales for the industry. But I think a couple of categories, Toys and Electronics, were particularly challenging. Can you talk about opportunities you have there? And then just generally speaking, how has your competitive analysis changed, if at all, in the last few years in terms of how you're viewing competitors in each of these key categories?

Yes, I'll start, Jeff, with your first question, about the holiday opportunity. And we do think that we have a lot of opportunity in the fourth quarter in a variety of categories. One, I would say certainly, Toys, which started off the holiday season very strong but ended weak, I think, we've got some opportunity, particularly in the month of December. And we've looked at our guests' buying patterns actually on a weekly basis throughout the holiday season to make sure that we're tailoring our assortment and our promotions with their mindset during each week of the holiday season, so I feel great about that category. Electronics was also challenging, but I do think some of the trends that you've seen building this spring with the iPad, for example, or e-readers, I think that those will bode well for the back half of the year. And we overindex with products like that. That's prime territory for our guests. I also think that our Apparel business has been gaining strength, and I think that bodes well for the holiday season, as well as a lot of the gift categories in Home. So we've talked about the improvement there really being led by Housewares. And I see that helping us as we move into the fourth quarter. In terms of our competitive analysis, I don't know that, that's changed. We continue to look at the same people, a wide variety of competitors. But I guess I would tell you that we're really focused on our game, making sure we understand our guests and how our products fit with their needs, so we haven't really changed how we look at competitors.

The only other thing that I would add, Jeff, is because we're -- we have high expectations for our online business now that we're converting to our own platform, we've been focusing more attention on other online retailers, and we've added them to the mix to make sure that we really understand the breadth and the depth of those competitive retailers. So that's really the only meaningful change that I would say we've made over the last 6 months.

Okay. Just one other -- one other clarification, just on mid-year cost of goods inflation. You see some mitigation of that inflation in the fourth quarter. Is that across categories? Is that Apparel specifically?

I would say it's fabric-related, so Apparel and soft Home, predominantly.

Your next question comes from the line of Peter Benedict with Robert Baird. Peter Benedict - Robert W. Baird & Co. Incorporated: Just a quick question, Doug, on the U.S. Retail SG&A. I know you did lever -- the growth rate did pick up, though, from the first quarter. Can you talk about maybe how you see that trending in the back half of the year, assuming, let's call it a 4% comp environment?

4% comp environment in the back half of the year, we would expect to continue to favorably leverage SG&A expense in each of the 2 quarters. Peter Benedict - Robert W. Baird & Co. Incorporated: Okay. And was there anything in this quarter that was maybe one-time or transitory in terms of the costs or no?

Certainly, and I would say that, that's usually the case, plus or minus, in every quarter. But net-net, I outlined the big issues that were isolated. Specifically, we continue to do favorably leverage store hourly payroll, which is obviously a wonderful thing to be able to do, and I think a reasonable leading indicator of what to expect in the fall season as well. Separately, as you know, there's a profit-sharing arrangement between our 2 segments, and some of the excess profitability of the Credit Card segment serves to reduce SG&A expense as a percent of sales in our Retail segment in a manner consistent with what you've seen many other retailers describe here in the quarter as well. Peter Benedict - Robert W. Baird & Co. Incorporated: That's helpful. And then one quick follow-up, over to the Credit segment. Obviously, the profit is growing nicely. You talked about how that would slow. As we look through the balance of the year, I mean, is it reasonable to assume that credit profits still grow year-over-year? Or could we be in a situation by the fourth quarter where perhaps credit segment profits are actually down year-over-year?

Certainly, as I said in my earlier remarks, we expect the rate of growth to slow considerably sometime later this year or early next year, as we normalize write-off in allowance relationships. Could it happen by the fourth quarter? Yes. The wildcard question you're really asking is what -- in my terms, what will the annualized write-off rate turn out to be when we settle into a new pattern? It's been dropping rapidly for well over a year. In the quarter just ended, for example, our write-off rate was 6.5% of receivables, almost half of what the write-off rate was. Last year, in the same quarter, it was over 12%. So we ended the quarter with an allowance of $480 million, that's 7.7% of gross receivables of $6.2 billion. The real question is, will the write-off rate settle in at 6%-ish? In which case, it will happen fairly soon, things will normalize by the fourth quarter and the dynamics you outlined would come into play, given the lower level of gross receivables that we're carrying now compared to last year. Alternatively, if it settles in at more like a 4.5% or 5% write-off rate, then we'd have several more quarters of this kind of benefit. It's too early to tell what that timing will be. But certainly, no later than sometime in 2012, we'll settle into a more normalized pattern with a more typical amount of bad debt expense in our Credit Card business segment.

Your next question comes from the line of Bob Drbul with Barclays Capital.

Doug, I guess the first question I have is, given you talked about a lot of the uncertainty from the last couple of weeks, the forecast that you've given us today, sort of third quarter and fourth quarter, have you made any sort of changes to those over the last few weeks in light of what's happening out there right now?

No, we certainly don't react like that in the short run, yet I would step back and acknowledge that if we were to expand the list of things that have gone our way and things that have gone against us so far this year that allow us to still be in the same position with the same earnings outlook we outlined 6 months ago, in my remarks, I mentioned on the positive side, the exceptional strength of our Credit Card business segment. Certainly, a secondary issue on that list would be that the exceptional cash flow from operations, partly driven by profitability in the Card segment and reduced receivables has allowed us to pick up the pace of share repurchases and get much farther much faster than we expected. That clearly has a beneficial effect on this year's earnings per share as well. On the negative side, I mentioned that our Canadian dilution now, same as it was in our disclosures 90 days ago, is higher than we outlined at the beginning of the year due to a variety of factors, some of them very powerful positives in the long run. In addition, obviously, our U.S. sales have been softer than we outlined at the beginning of the year. But that's not a change that's occurred here the last couple of weeks. We expected sales to be stronger as the year progressed. We did not expect the first quarter to be as soft as it was. On an absolute sense, certainly, our sales aren't likely to be as strong in the third and fourth quarters as we might have thought 6 months ago, but that view hasn't changed in the last few weeks.

Okay. And then I think Kathy said "pleased" with the early reads on Back-to-School supplies. Have there been any surprises thus far either competitively or within your stores on the trends in Back-to-School?

I don't think there have been many surprises. I would say guests continue to shop. Some of them are very planful and they shop early. The majority of guests, though, continue to buy close to need. So we still have a ways to go here before the exact results of Back-to-School, Back-to-College. But I would tell you that the early shopping results from Back-to-School supplies was very strong, and we saw guests trading into better product, which we were pleased with. I guess the only thing I would say is that I do think the competitive environment has been a little bit more reasonable this year in Back-to-School supplies. And so again, we've got the bulk of the season ahead of us. We'll see how that progresses, but so far so good.

Great. And then my last question is, Kathy, could you give us AUR maybe in the first half on Home and Apparel and your expectations for AUR in those categories for the second half of the year?

Well, I would tell you, obviously, they're both up in the first half. As we talked about previously, we were looking at low- to mid-single-digit in Apparel, and some mid-digits in Home. As we progress into the third quarter, we're going to see double-digit in both Home and Apparel. Most of that is hitting in Apparel here in August and September. So there's increase not so much in prices on particular items, but more items increase as we move into the third quarter.

Your next question comes from the line of Mark Wiltamuth with Morgan Stanley.

I wanted to ask how much of the sales mix right now is the food and consumables? And how far through the remodel campaign are you on PFresh?

Food and consumables represents midway point between 15% and 20% of our sales. By the end of this year, we will have completed approximately 900 out of the, say, 1,400 or 1,500 stores, general merchandise stores that we're going to be PFresh-ing. So that's 60%, 65% by the end of the year.

Okay. And then your tax rate was a little lower this quarter. Is that a factor caused by Canada? And should we expect a lower tax rate over time because of Canada? And maybe just an outlook from Doug on the tax rate for this year and next year.

Well, as we disclosed 90 days ago, we expected a tax rate between 36% and 37% for the year, and it came in at 36.4% for the quarter, right on the midpoint of our range of expectation. So lower is lower than last year but not lower than expectations. And it's driven by all kinds of factors. Canada perversely actually drives it higher in the short run because Canada has a lower tax rate. And a lower tax rate during a period of losses in Canada actually increases, not decreases our consolidated tax rate. This will be an enormous benefit over time when Canada turns the corner. But in the short run, it's a drag.

The next question comes from the line of Robby Ohmes with Bank of America Merrill Lynch.

A couple of quick questions. One of them, I guess, is for you, Doug. Just quickly, the remodels, the 180, were they significantly disruptive to the comps during the quarter? And if so, can you give us any quantification on that? And then I have a few other follow-up questions.

No more disruptive than they've been recently. We've been working super hard to minimize the disruptive impact to the extent that we can. So it's a few tenths, but it's not any different from other quarters in which we've had this degree of disruption in the last year, 1.5 years.

Got it. And then the other question I had for either Gregg or Kathy, in your comp composition, the selling price per unit was up for the first time in, I think, over 2 years. I think, when you were answering Bob Drbul's question, you talked about more price increases coming through. Can you sort of paint a picture for us? And I think you also mentioned trade-up, a little of a trade-up you're seeing now, Kathy. Can you paint of a picture of what -- can that selling price per unit keep accelerating? Is it mix driving that or price increases coming through? Do you think you are now finally seeing some of that trade-up we've all been waiting for?

Yes, that's hard to give you an exact number, although I would tell you I think what you've seen so far is predominantly price increases and some trade-up. The trade-up we're seeing in very specific categories, as I've outlined in the past. In Home, in particular, our good segment has been the strongest. But we've also had some great strengths in the best segment. So when that 20% of guests that I talked about that are in the higher-income levels, they're willing to spend more. And in areas like Home, where we have high-end products like Fieldcrest Luxury and Smith & Hawken, we are seeing them trade up. And in fashion, I will tell you, where we have increased the retails and added more into the make of the garment, we're seeing those perform better. So I believe we're seeing some slight trade-up, but mostly so far, I think what we've seen is a price increase.

Analysis of average unit retails in a business with a breadth of assortment that we have is a supremely complex exercise. I'll take food for an example in the quarter just ended. There clearly was some inflation in our average, driving average unit retails higher in our food assortments, yet our food category grew much faster than the rest of the business. And food retails, on average, are quite a bit lower per unit than retails in the rest of the store. So even analyzing food for a moment has 2 competing and quite substantial factors that partially offset each other. This is a really, really complex analysis, given the breadth of our assortments.

Your next question comes from the line of Greg Melich with ISI.

Two questions. First, Doug, quickly on the CapEx. I assume that number, the $1.7 billion in the quarter included the Zellers -- the payment for Zellers, the first one?

Yes.

And for the full year, is the CapEx x those payments where you expect it to be, around the $2.5 billion still?

Yes.

Perfect. And then Kathy, maybe to follow up on something you said about the future on assortment. The changes you're making to bring sheets and other things together, is that just reordering things in the store? Or are we actually changing the SKU counts and buying different things as part of that?

I would tell you that the change that will start to happen in September, there's some product changes. Most of it is merchandising, putting components together. So in the past, we would've had collection bedding that would've been merchandised by brand. So for example, Fieldcrest Luxury would have had a run that would have sheets, blankets, duvets all mixed in together. And starting in September, we're going to break that apart so that all components will be together. So all sheets will be together, all duvets together, all blankets together. Of course, we always have product updates with every transition, so you will see some of that. But I believe from a guest perspective, the most notable change will be how it's merchandised.

Great. And then lastly, if we look at the inventory, up just over 4%. Maybe it's a follow-on from the AUR discussion. How much of that 4% increase would you say is attributable to the higher prices or inflation of what you're buying?

We honestly can't answer that question. I could speculate, but there's so much in the way of dynamics in that figure that it's not possible for us to know that. We analyze inflation at a fairly precise level or as precisely as we can analyze it once a year, and that's as of October 31.

The next question comes from the line of Adrianne Shapira with Goldman Sachs.

You mentioned that the pace of same-store sales was obviously key. I'm wondering, Gregg, when you step back and you look at comps have accelerated from Q1 to Q2, obviously, the weather was much more accommodating. That helped. But it seems as if discretionary categories started to improve. Are we finally starting to see customers cross the aisle as we had hoped?

Well, I mean, they never abandoned the other side of the aisle. They're just slightly more confident in the second quarter than they were in the first quarter. I mean, we've laid out the case, as Doug mentioned earlier, that we expected our same-store sales to accelerate throughout the course of the year. There's still pressure on the discretionary categories. But I think over time, if we offer the right items at the right price and we're offering value and our merchants do a great job, like they have been in terms of merchandising within the discretionary category, we'll continue to gain share and that side of the business will strengthen. We saw some of that in the second quarter, and we expect that to continue as we go forward.

Great. And then, maybe, you had talked about in the remodels you're seeing higher visits. Maybe shed some light in terms of what you're seeing between the categories, the discretionary and more staple side of the store, what you're seeing in the remodels.

Yes, I mean, the pattern hasn't really changed materially from what we've been experiencing over the last 2 years. We get in immediately -- immediate large bump in our food business and related crossover categories, and we get a very slight increase in nondiscretionary. And over time, we expect to convert more of that traffic to the nondiscretionary -- or to the discretionary side of the business. But that's a long-term objective of ours. So out-of-the-box, it's primarily food, it's health and beauty aids, it's household chemicals, papers and those kind of related categories. And it's really about engaging the guests, getting her more comfortable shopping our stores more often, building loyalty and trust on the need side of the business, on the frequency side of the business, and then we will continue to market to her all the other great things that we have throughout the store. So the food is a planned trip, and then the less-planned trips, she will experiment and she will spend more time on the other side of the store as we begin to market those categories more aggressively to her via direct mail, receipt tape marketing and some of the other alternatives that we have.

Okay, great. And then maybe just shifting to the gross margin outlook in the back half. As you have seen some improvement in the discretionary category performance, and you've obviously got some exciting launches coming in the back half, how do you think about the mix shift as we head into the back half if, in fact, discretionary perhaps starts to improve and you're lapping some easier comparisons from a year ago on the gross margin line?

There will be some shifts. I think they will be fairly subtle over time. Certainly as a broad theme, we would continue to expect year-over-year adverse mix Q3, Q4 in terms of the impact on gross margin rate just as we've experienced for quite some time, both as a result of our sales-driving strategies and as a result of what typically happens with the passage of time here, regardless of those 2 strategies. Separately, I would expect to continue to leverage operating expenses and continue to enjoy the benefits of favorable leverage in depreciation and amortization expense. Net-net, we said 6 months ago that we expect those very factors to generally offset within our Retail segment for the year, delivering EBIT margin rates in line with 2010 experience, and that remains our outlook today.

Your next question comes from the line of Deborah Weinswig with Citi.

A few questions. You talked about on the call that the 20% highest income is really driving the growth. Is there any change in your thought process as regards to merchandising or marketing as a result of that?

First of all, Deb, what I was talking about is that, that's sort of an industry number that we're seeing -- that, that's the group that's shopping, taking more trips and being more confident. At Target, what we're seeing is a pattern of more trips through all of our guest segments. Clearly, it's stronger in that upper income, but we're seeing it in every income level. So we do believe that we are gaining some of the trip consolidation that's happening. As guests are trying to save money on gas and taking fewer trips, they are choosing Target as a one-stop shop, and so we think we're benefiting across all income levels.

And then Doug, what do you think is the most important variable for your same-store sales growth?

Consumer confidence and GDP and employment all wrapped into one set of related macroeconomic statistics.

Okay. And then last question, as we look at your core comp, how should we think about the contribution from PFresh and 5% Rewards for the quarter?

Well, certainly, it's getting harder and harder to give you a reliable numerical answer to that question because so much of our chain -- and not any random portion of the chain, by the way, has been converted to PFresh. And separately, with the whole country under a 5% Rewards loyalty program, we don't have any base stores to compare the incremental performance. But keying off of the outlook that we gave at the beginning of the year, we can certainly make a broad statement. We said then that we expected PFresh, as the year progressed, to deliver somewhat more than 1 point of same-store sales performance. We said that later in the year, we expected 5% Rewards to grow to more than 2 points of contribution. So haircutting those themes a little bit for Q2, any way you slice it, the contribution of those strategies clearly was less than the overall comp of nearly 4%, whether the base in isolation in that sense was 0.5, 1 point, 1.5 point becomes kind of academic in its exercise. But clearly in that kind of analytical workup, it would be positive no matter how you slice the numbers.

You're really definitely seeing some underlying strength in your base comp?

No. As you're defining the base comp, certainly, that was the case for the quarter, yes.

Yes. I think what we're saying, Deb, is going forward, PFresh, 5% Rewards, that is so integrated into our strategy, that is really our base comp going forward. There really isn't a core base remaining group anymore because we've got 5% everywhere. There are no control stores. We have, by the end of the third quarter, PFresh-ed over 900 stores. There aren't good comparisons. We've done the best stores, best market. And so that really becomes the great one-two punch, and it's integrated. That really is the base business of Target going forward is it's the combination of those 2 elements that represents our base and our core.

Your next question comes from the line of Wayne Hood with BMO Capital.

Yes, just on that topic of PFresh and so on. Gregg, as you think about the stores that are left to do and what you have going on in Canada, would it be a fair assumption that we should be thinking about PFresh really getting scaled back in '12, just so you can manage all the things that have been going on? Or are you going to continue to try to finish up the remaining group?

We have a plan for 2012 and 2013. We have planned for -- we haven't released the number next year, but we really believe that this is the right strategy. It has delivered great results. And so we are planning to continue with PFresh in 2012 and 2013, completing the chain. These are going to be fill-back stores in existing markets because there aren't any markets that we haven't already initiated this change. But this is core part of the strategy. And regardless of what's going on in Target Canada, we're going to continue and get through the balance of the chain over the next 2 years -- or 90-plus percent of the chain.

Okay. And then Doug, just had one question for you. Coming back to the net write-off, where you were talking about earlier in the portfolio, that's also a function of growth in receivables. And it looked like the growth in average receivables, the decline was not maybe as bad as the first quarter. So I guess, as you think about the back half of the year, it still declines, but can you put some parameters around the rate of decline? And if that starts to grow again, obviously, that's going to drive that write-off rate even down more.

Yes, certainly. What's going on in terms of gross receivables is right in line with the expectations that we previously laid out, specifically that we expect gross receivables to be fairly steady sequentially, in the range of $6 billion, $6.2 billion in the quarter just ended. There will be versions of that theme moving forward. Against the year or against prior year actuals, it means the rate of decline will continue to be lower and lower.

Your final question comes from the line of Dan Binder with Jefferies & Company. Daniel Binder - Jefferies & Company, Inc.: Your main competitor has talked about price investment a lot in the past. And what they've said and done are sometimes different. But with that said, the language that they're using more recently seems to be stronger. And I'm curious, if we do see more price investment from them, would you use the 5%-off program as sort of a catchall to match them or essentially match them? Or would you be more compelled to match them on the item itself?

Our goal, Dan, is to be competitive with the value as well as the retail on all items. And our 5% REDcard Rewards is a loyalty program for the guests that have a credit or debit card. So in merchandising, we watch competitors very closely for their content, the quality, what's built into it, and of course, the retail. And we will be competitive. Daniel Binder - Jefferies & Company, Inc.: Okay. I don't know if I missed this. Did you give your best estimate on what inflation contributed to the overall sales growth?

No, we did not. I'm not sure that any retailer has the IT capabilities to give you a reliable figure on that. Daniel Binder - Jefferies & Company, Inc.: Okay, and then my final question, if I could. The mix shift -- or the mix impact, I should say, was pretty impressive, I'd say, less than we would have expected, and you had some offsets in the gross margin that helped that along. As we think about it going forward, in a sort of a simplistic way, I realize, but can you give us sort of a rough idea of what you would think the sort of the base case would be for the mix shift? Is it 20-20-20 type impact from the core shift that we've normally seen and then 20 basis points each for the 5% and PFresh? Or is that too simplistic?

No, let me clarify. Let's go back to what I said in my remarks to understand the base case. When I talked about the impact on gross margin rate of mix and of rate within categories, the overall gross margin rate decline is 35 basis points. And I said that the mix impact was somewhat larger than that, slightly larger than that. And it was offset by rate within categories, and broadly, the 2 strategies combined drove most of that. Additionally, beyond the effect of the 2 strategies, there was some rate benefit within categories. So what does that mean? It means moving forward, we expect to continue to see some adverse mix due to those core integrated strategies, and there was some background adverse mix even before those strategies came along. But the mix impact is a PFresh impact, not by and large a 5% Rewards impact. So it isn't 20-20-20 even if you change different numbers. 5% Rewards has virtually no impact, tiny impact, on our consolidated mix statistics. So net-net, I would expect to continue to have adverse mix impacts partially offset by these rate effects, driven in large part by our integrated sales growth strategies. I would expect variations on the theme of the second quarter to be playing through our numbers for a long time to come.

Okay. Well, that concludes Target's Second Quarter 2011 Earnings Conference Call. Thank you all for your participation, and we'll see most or all of you tomorrow in New York.

Ladies and gentlemen, this does conclude today's conference. Thank you all for participating, and you may now disconnect.