Well, good morning, everybody. Thanks for coming. We're really happy to be with you here in New York again today. Brian's presentation will start in a couple of minutes. And in the meantime, there's a couple of important messages that we need to convey. The first is that 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. And the second is that in today's remarks, we refer to non-GAAP financial measures, including adjusted earnings per share. Reconciliations of all non-GAAP measures to the most directly comparable GAAP measure are included in our financial press releases and SEC filings, which are posted on our Investor Relations website.

[Audio Gap] And I want to start by thanking you for being here today. I've seen that video a dozen times now; It's pure joy, it's pure Target, and it's why I've never been more excited to be part of this brand and to lead this great company than I am right now. This morning, we announced our most successful year-over-year performance in well over a decade. Our comp sales surged this holiday season, fueled by unprecedented traffic gains, especially in our stores. We closed out Q4 with a 5.3% comp, our strongest finish since 2004, putting Target right in the center of the winner's circle. Across the business, we're growing market share in every major category. And our guests love what they see. Our team deserves all the credit. They are more passionate and committed than ever to delivering on our purpose, which is helping every family we serve, find joy in all of life's everyday moments. So while I'm here on stage, holding up some of our strongest results in a generation, this performance isn't simply a reflection of a strong consumer environment. These results were years in the making, proof of the progress we've achieved against our multiyear strategy to transform our company; deliver strong, consistent and durable growth; and emerge as one of the industry-leading retailers for years to come. Back in 2017, we laid out an ambitious investment agenda to reimagine our stores, reinvent our supply chain and fulfillment capabilities, to reposition our own brand portfolio, invest in our team. And I think we can all agree, at that time, the plan was not met with universal applause. I won't name names, but a few of you might have pulled me aside and said, "Brian, are you sure this is the path you want to pursue? Do you really want to bet the company on stores?" At that time, people were closing stores, not opening them. They were cutting costs, not investing in their teams. But we've never been a brand that falls in line with the crowd. Our guests aren't looking for red and khaki version of someone else. They expect us to be different, they expect us to innovate and inspire. They expect us to be Target. So with our guests as our guide, we kept our stores and our people at the center of our strategy, but committed to deploy them in a radically different way. Two years later, we redefined what it means to be welcoming, inspiring and rewarding in retail. Our teams are obsessed with finding new ways to make our guests' lives just a little easier. When you look at the results and pick your metric, traffic, comps, Net Promoter Scores, guest surveys, it's clear, our strategy is working. We're delivering the right outcomes, and folks are taking notice. Take a look. [Presentation]

I'm really proud of that work, and I'm really proud of our team. 350,000 people who get up each day dedicated to making those moments happen for our guests all across this country. Yet as much of them are encouraged by our success, I'm always the first to say we still have a lot of work left to do. You know this better than anyone. As the shakeout in our industry continues, the separation between those who can afford to invest and those who can't is real. The channel convergence between physical and digital has come full circle. And today, Target is leading the way. While we might be ahead of the pack now, this is no time to slow down, and I can promise you, we won't. As we look to the future, I think it's important to take a moment to step back and look at where we started. So think back to this meeting in 2016, just 3 years ago. We're over at Chelsea Piers. I remember it was a beautiful day, and I started with an anecdote that was, well, at that time, an aspiration. I talked about how some day, not long in the future, a mom who works here in New York City would be able to plan a birthday party right from her office, shop for everything from her phone from the train and then pick up her order before shuttling her kids off to swimming lessons. The punchline was that in the future, the whole thing would go off without a hitch. Fast forward to today, we've got that use case down cold. We got there because we spent 2016 shoring up the fundamentals. 2017 was about laying out an investment agenda and developing new capabilities. 2018 was all about acceleration and…

Thanks, Brian. One of the great things about working in retail is that every day, 365 days a year, we get a new report card from our guests. Most of the time this real-time feedback lets us know that things are working as planned. In contrast, 2 years ago, those report cards were clearly showing that we needed to change. And based on last year's strong performance, this latest report card shows that we've been successful. But it's worth taking a look back to see just how far we've come. Here are couple of charts I showed you in the same room 2 years ago. These 2 annual report cards clearly showed the reversal in our performance between 2015 and 2016. With that feedback, we took a hard look at ourselves and how we fit into the retail industry, including our strengths and points of differentiation. We did an in-depth assessment of how consumers are evolving and shopping differently. That work confirmed, we were already focusing on the right priorities, but we weren't moving fast enough. The greatest hockey player ever, Wayne Gretzky, referred to this as skating to where the puck is going. We were headed in the right direction, but our guests were moving faster. Fortunately, we had the resources we needed to accelerate, strong operations and well-located stores, a fiercely loyal base of guests, robust cash flow and a strong balance sheet and the best team in retail. So here in this room 2 years ago, we laid out a bold new plan. We committed to make additional investments of both capital and operating margin to help Target deliver more for our guest faster. These investments were focused on delivering an ever-improving guest experience not just for today, but for many years to come; more than 1,000…

Good morning, everyone. Two years ago, in this room, we laid out the major investments we're making in our business, including using our stores as fulfillment hubs to get closer to the guests. Last year in Minneapolis, we showed you the prototype for how those ideas were taking shape, and we told you we are making Target the easiest place to shop. Today, I get to show you how we've done that and how the investments you've heard about have become very real from the way we're remodeling our stores to how we pick, pack, ship and deliver out their doors. It all starts with our store teams and the expertise and talent they have that brings new services and experiences to life for guests, and it's supported by our supply chain efforts that ease the operational workload in our stores. I'll talk more about those in detail. But I'm going to start with our fulfillment capabilities, because for our guests, that's what has really stood out this year. We scaled Shipt to nearly 1,500 stores in more than 200 markets in a matter of months, expand the Drive-Up to nearly 1,000 stores coast to coast and are delivering hundreds of thousands of items in 2 days or less. We all know that operation's presentations don't start with a fancy highlights real. And for years, our work was largely behind the scenes. And it's obvious why engineered processes and algorithms don't ever make the marketing cut. But for the past year, after launching -- both launching and expanding our fulfillment services and seeing guests' excitement for them, we've got a whole lot more sizzle to show. So here's a look at all the ways guests can get the Target run done. [Presentation]

For most of Target's history, guests have had one way to shop. They came into the store, walk to the sales shelf and essentially pick their own order and drive it home. In the late 90s, when we added an online business, we began shipping orders directly to the guest. At that time, that was a new and radical concept for Target. But today, it's a relatively mature fulfillment method for just about any retailer. Then about 5 years ago, we began offering in-store pickup. This started to change the game from the 2 extremes of guests shopping only in stores and Target shipping only from a warehouse. Guests liked placing order online and picking it up not far from their home that same day. Since then, we've quickly grown the options we offer our guests. It went next day, same day, in the car or at the door. We have a way to deliver. Whether it's same-day delivery shop by Shipt or newer service Drive-Up. Placing an order and waiting for it to ship is something consumers already know how to do. But having an order popped in your trunk just an hour after you order it is a pretty new concept. As Drive-Up expands, we're helping guests experience a whole new kind of convenience. Take a look at how Drive-Up is making the Target run easier than ever. [Presentation]

We make close to 2 million of those parking lot deliveries last year, and nearly all of them took less than 2 minutes, many even less than 1 minute from parked car to product handoff. Guests love it. The Net Promoter Score repeat rates for Drive-Up are up -- are extremely high, and they tell us it's easier and more convenient than having a box dropped on their step. Here's a look at an actual email we got from a guest on a cold night in January. And no, it wasn't during the week that was 30 below 0 in Minneapolis. It was just a regular night for a mom who didn't have much time. She'd been meaning to try the service and finally did, and in less than 2 minutes in our parking lot, she saw how Target really understood what she needed. And it's just one email, but it speaks to what we hear from guests whenever we enter a market. In fact, in Minneapolis, the first market to have the service, we've seen it grow more than sevenfold year-over-year. With that excitement and fast adoption in just one market, we expect to see a lot of growth in Drive-Up across the country as we continue to expand most of the chain. Each of our fulfillment option satisfies a different need and serves a different kind of shopping trip. As guests are learning about these services and experiencing how convenient they are, they're choosing them more often. For example, we're seeing guests choose pickup instead of shipping, and we expect demand for our newer service to continue growing the fastest. And what if I told you we can offer all those services in a way that makes us faster, lowers our costs and leverages existing assets to drive…

What we're doing in supply chain is the reason we're able to grow in dense, urban areas, where we can serve new guests. But it also makes it possible for our full-size stores to act as efficient local fulfillment hubs because the product it needs in-store guests and online orders. In the past couple of years, we've lowered our out-of-stacks as a total company. Now we're focused on reducing out-of-stack variability between individual stores. To do that, we're improving how we transition merchandise from one season to the next and improving our direct-to-store deliveries, and we'll see even more out-of-stack improvement as we scale our replenishment model over time. It all comes down to this, investing in how we replenish stores has given us a sturdy set of rails to serve those stores. And with a strong foundation in place, our fulfillment operation glides right on top, so we can offer our guests so much more ease and convenience from their local stores. Digital fulfillment is a big platform for growth and is an enormous opportunity to serve our guests in new ways, but at the end of the day, an overwhelming majority of retail experiences still happen in the store. So make no mistake, our store teams have to nail it. Helping guests find what they need before they even ask, sharing their expertise to make recommendations, presenting merchandise in a way that's easy to shop and fun to explore. The point of our investments upstream is to put more team members on the sales floor, helping guests instead of in the backroom checking off tasks. A couple of years ago, the stores team kicked off an effort to modernize the way we run our stores from how we use our talent to the many ways we invest in our team and all against the backdrop of our commitment to reach a $15 minimum hourly wage by the end of 2020. We started training our team to be specialists so they could bring expertise to how we serve our guests in each area of the store. We improved the technology they have at their fingertips to make their service even better. Today, our team can help guests check out anywhere in the store or place an order for something not in stock all from their mobile device. It's all about continuing to elevate the guest service and experience. So here's a video we use this fall at our annual company meeting. It's our team talking to our team about what we're doing inside our stores to serve our guests better than ever. Take a look. [Presentation]

We're modernizing both inside and out as we continue remodeling hundreds of stores across the country. The biggest difference, we've enhanced our experience with updated decor, lighting and color by opening sightlines that really let the product shine. Last year, we completed more than 300 end-to-end remodels, and the most we've done at any time in our history. The reaction and complete excitement from guests doesn't get old. They tell us they love what we've done with the place. But even better, they shop us more often. We consistently see an average 2% to 4% sales lift per store after a remodel. We've moved at an unprecedented rate to touch a majority of our stores in just a few years. We'll do another 300 this year as part of our effort to have more than 1,000 remodeled stores by the end of 2020. Beyond that, we'll continue remodeling the in-store experience across the chain but at a more moderate pace for the long term. While we're investing in existing stores, we're also finding new sites to serve new guests. Last year, we opened more than 1 million square feet of sales floor in small format stores, entering big markets like New York and new markets like Vermont. In fact, some of our most recent openings have already become our highest volume small format stores, even as the traffic in our mature small formats has continued to rise. This year, we'll open doors in growth areas like L.A. and Washington, D.C., near college campuses in Seattle and East Lansing and also in new communities for Target like Cape Cod and Santa Barbara. These stores help us enter new neighborhoods, where a full-size store wouldn't fit and where we see a need we can fill. And they continue to show strong financial performance, beating our chain average of comparable sales growth and productivity. To a building owner or a developer, Target's a strong brand and a sought-after tenant, which has positioned us well to capture great opportunities during a time when hundreds of empty retail boxes are suddenly up for sale. We'll continue to evaluate where we can meet new guests or better serve existing ones and maintain our pace of opening approximately 30 new stores a year over the next few years. Target's confidence in stores hasn't changed. It's where everything we're doing for the guest comes together, to create experiences that are differentiated, inspiring and easy. We're using our stores as stores, stores as fulfillment centers, stores as the local connection to our guests even if they don't come inside for every trip. In our more than 1,800 stores, with the passion and talent of our incredible team, we remain at the center of how we deliver, grow and differentiate for years to come. Thank you.

So clearly, a lot of incredibly exciting work is underway, and the future is just as bright. Since you've heard from Cathy and John, we're clearly focused on harnessing this success, using it to fuel, sustain growth across the business as well as reducing costs, improving speed and efficiency. We're building a durable financial model that will propel Target forward in any economic environment. It's a model that translates top line growth to bottom line performance. So in a typical year, you should expect to see low single-digit comps leading to mid-single-digit growth in operating income and high single-digit growth in EPS. The model is also built to deliver higher after-tax ROIC, pushing us further into the mid-teens during the next few years. So let's walk through what this means for 2019, starting on the top line. You saw the detailed numbers in the morning's press release. For the full year, we're guiding to comp sales growth in the low- to mid-single digits. That will reflect the combination of increased traffic to our physical stores, strong market share gains in digital, greater adoption of our fulfillment capabilities and market share growth in every major category across both stores and digital. Moving down to P&L. As you heard from John, we're acutely focused on controlling costs to offset increased pressure for our wage investment and fulfillment growth, generated by our growing digital business. With that discipline in 2019, we're planning to deliver moderate improvement in our operating income rate, which will translate into mid-single-digit growth and operating margin dollars. And combined with the benefit of a lower share count, this operating performance will translate into high single-digit growth in EPS. As you heard from Cathy, for many years, Target has taken a consistent, disciplined approach to capital deployment. In 2019, we…

Simeon Gutman, Morgan Stanley. So you're guiding to profitable growth, and you said this is the durable model going forward. I think on TV, you said, "We're getting to the path of stabilization." So I'm curious if there's anything that you're looking out that's maybe more subdued. Like, why that comment? And then second of all, given that the business now has this potential, was there any debate of guiding to flattish margin just so you have more ammunition to invest?

Yes. It's a great place to start. And again, if you look inside of our Q4 results, we started to see that margin stabilization. And as we adjust for the 53rd or the 52nd week changes, we're starting to see that improvement, and we expect that to extend into 2019. So when you look at our focus on efficiency, on reducing costs, as you see demand shift to more profitable fulfillment measures, we expect 2019 will be a year where we deliver consistent operating margin improvement, coupled by very solid single-digit, mid-single-digit comp growth in the first quarter, single digit throughout the year, and that's going to translate into high single-digit EPS. So all the work we've been doing for the last few years is starting to come together. And I've talked about this a number of times, the great part of our strategy is it's not driven by one single element. It's all of these elements now coming together, maturing at scale. And importantly, the guest and the consumer is voting with their wallet and with their feet. So it's all starting to come together, and we're building that flywheel that will extend into 2019 and beyond.

It's Michael Lasser from UBS. You laid out several factors that'll drive gross margin stability. How much have you assumed you're going to have to invest incrementally in promotions and price to achieve your goal of gaining market share across every category?

Michael, I'll let Mark jump in here a second. One of the things we talked about in our prepared comments, and we've talked about it over the last couple of years, is this investment we made to enhance our pricing and promotional capabilities. And we've made tremendous progress, built real expertise. So we feel very good about our pricing position today, the value we're offering against our entire portfolio. And as we look to 2019, we'll make sure that we continue to be competitive, that we're priced right daily, that we offer great value to our guest. That's at the heart of our brand promise when you think about Expect More and Pay Less. That's going to continue, and we think that's going to be very durable as we go forward. So we're committed to being priced right daily, delivering our guests great value across all our categories, and I think we're well prepared for 2019 as we think about our pricing and promotional position. Mark?

Yes. I'll just add that -- to reiterate what Brian said. Last 2 years has been about creating a lot of stability in terms of price and promo as well as helping with our trips and traffic, and we've been outpacing regular price sales -- [ visit ] promo sales for the last 2 years and created great stability and trust with the guest at regular price as we manage price values. It's really working for us.

This is Eddie Yruma from Keybanc. You've made some management changes within food and beverage. It seems like you're putting some real muscle there. How do you dimensionalize the opportunity? Any kind of early findings?

Why don't I go back to the progress we've made over the last several years? We've made major commitments to improving our Food and Beverage supply chain, our merchandising, our in-store operations. But we did make the decision earlier this year to bring all of those functions together under one leader, and Stephanie is here today. And as we looked at that business, we recognized it's very different from any -- many other parts of our portfolio. The products we sourced, the perishability of it, the cold chain environment, how we manage product from a store level. So we made the decision to bring all of those elements together under one leader. The functions will still -- were very closely with their counterparts in supply chain, in merchandising, in pricing, in marketing. But having one dedicated leader who thinks about Food and Beverage every single day and is connecting the needs in supply chain to merchandising, to store operations, I think, is going to yield significant benefits in the year to come. But we've been growing our Food and Beverage business for over 6 quarters now. 2018 was a year where we took market share gains in many of our key and essential Food categories. And I think with Steph's leadership, we're just going to continue to build on that in years to come.

Greg Melich with Evercore ISI. So couple of years ago, you talked about investment and how that was going to invigorate traffic, and it's worked. As you look out now to the next couple of years and after that, where are we on that investment cycle in terms of in the P&L versus CapEx? So more specifically, sounds like remodels will peak the next couple of years, so maybe could CapEx start to come down again? Or will investment then go back into the P&L? And then on supply chain, do we need to now ramp up at some point in supply chain investment? Just where are we on the cycles of that would be really helpful.

Greg, honestly, 2 years ago, we talked about the significant investments we were going to make in stores and reimagining our stores, the investments we're going to make in our brands, the investments we're going to make in fulfillment capabilities and our team. I think now we're at the point of maturing and scaling those investments. John talked about in great detail the work that we've done from a replenishment standpoint, a fulfillment standpoint. We're going to continue to build awareness and adoption of those fulfillment capabilities in 2019 and beyond. We'll continue to remodel stores, and we certainly like to see the lift and the return that we're getting with those stores. We think we've got a pathway to open up many more small formats. But many of the big investments we made are going to start to normalize over time. So I know one of the questions that's been on everyone's mind is: Is there another big, Brian, billion-dollar investment? Is there a need for additional CapEx? As you look at our guidance and you look at our plans today, the answer is no. We'll continue to invest in our stores. We'll continue to open up new small formats. John and his team will continue to scale and mature our replenishment in supply chain. Mark and his team will continue to develop and roll out exciting new brands. But many of the big capabilities are now in place, and you're starting to see the leverage in our guidance for operating income in years to come. So I know all of you have been waiting to ask that question. There is no billion-dollar surprise for today. There is no major new initiative. We're going to continue to execute the strategy that's in place, that's working today, that's being well received for -- by our guests for many, many more years to come.

Peter Benedict at Baird. You talked about the new replenishment model that's going to be rolled out to some of the smaller stores. I'm curious what's the time line for getting that to start impacting the larger stores. And related to that or somewhat related, are there any marketing or pricing plans in place to incentivize customer use of the different fulfillment options that you have for digital?

Yes. Why -- handle the back end. And then, John, why don't you talk about some of the timing? And Rick, why don't you jump in from a marketing standpoint? One of the things that we didn't talk about specifically today is the path and the journey we've been on with our fulfillment capabilities in building awareness. While we've been working on many of these for upwards of 5 years, pickup was something we started talking about almost 5 years ago. And over the last year or so, we started talking about the fact that we've gone from testing Drive-Up to scaling to almost 1,000 locations. It was December 2017 when we acquired Shipt. In that same time period in major metro markets, we started offering our same-day courier service, leveraging our Grand Junction capabilities. But it literally wasn't until the fourth quarter of 2018 that we started talking about it to our guests, actually starting to build it into our Target Run and Done campaign. So as we said earlier today, now it's about building awareness. Because what we hear time and time again, when our guest realizes that they can place an order, drive in our parking lot, and within 2 minutes, we'll put that order in their trunk, they love it. The Net Promoter Scores are the highest we received for any service. But in many cases, they just haven't been aware of it. Because we wanted to make sure we built the processes, we had the systems in place, we had the measures that we knew our guests were looking for before we started to really talk about it. As we go into 2019 and beyond, we're going to incorporate that into our Target Run And Done campaign, make sure that America knows we are the…

Sure. So I'll go back to when I talked about it. I think we're starting in the Northeast. We need to scale Perth Amboy, first of all, and service the small formats, the significant number of small formats we've opened and will open in the Northeast to start with. Right now, the team is thinking about what retrofitting an existing building looks like. We've run an iteration, probably #3 of that right now. We need to get a little bit further into the Perth before we finalize that. I would tell you the thing we think about is we move cautiously to start, and the concern is we don't get to shut down a building because we don't get to stop selling for some period of time for the stores that are served by that building, and so we will move cautiously at the beginning. We want to ensure we don't have buildings that are disrupted during Q4 because we don't want to create problems there. So I think you'll see a start, a retrofit of an existing building. Probably early next year, get one of those behind us. And then, Peter, I think we have a much better idea how that goes. We'll obviously refine it and then how quickly we can scale across the rest of the country.

Chuck Grom from Gordon Haskett. On the Target Plus initiatives, one thing you didn't discuss this morning, so I was wondering if you could shed some light on that effort. I think it's probably been 10 years since I've asked a CEO this question. But -- on the number of store opportunities ahead for -- to the small format at Target.

Great. Rick, do you want to talk about Target Plus?

Target Plus is a new initiative that we are very excited about because it has the opportunity to grow our dotcom business in a profitable way, and what it is about is how we can expand our online assortment into new whitespace. It's Target's version of a marketplace, but it is different than our other competitors. And it's different because we are known for a curation, and our consumers, our guests expect that. So Target Plus will be invitation-only. It's not intended to be a catalog of a list of products and products and products. Rather, we're going to go very deliberately, very intentionally after the right categories, the right brands and then offer them on Target Plus and with third parties. And for us, it's a profitable way to grow our dotcom business because the third parties deal with the supply chain components of it. And then what we offer, which I think is a competitive advantage, is you can take your product, and if you're not happy with it and you want to return it, you can take it to a Target store, which is something that our competitors can't offer. But the one point I would just say is it's still in its early stages, but we think, long term, can be a profitable growth driver for us.

Chuck, on the new storefront, we certainly think for small formats, we've got dozens and dozens of opportunities in front of us. And we've taken a very disciplined approach. Just a few years ago, we were still testing and learning how to operate in a smaller-sized store. Our merchants were learning how to curate the right assortment store-by-store. Our store teams were learning how to operate in a different environment. From a supply chain replenishment standpoint, we had to figure out how to deliver and replenish to those stores, where you can't pull up a 40-footer. So we've taken a very disciplined approach. The great part today is we now have demand coming our way. We have local communities that are putting up their hands saying, "We'd love to have a small Target store on our college campus, in our local neighborhood." So we're seeing an abundance of opportunities, and we'll continue to be disciplined as we move forward. But we see opportunities to open dozens and dozens of stores across the country in urban settings and on more college campuses in the years to come. And as I said earlier, they're our most productive stores in America, delivering some of the highest sales per square foot that we've seen across the country, and the demand for these stores continues to grow. So we'll continue to meet that demand over time.

Chris Horvers, JPMorgan. Can you talk about sort of what you expect in terms of share gains within a low to mid-single-digit comp and then sales a little bit better? What categories outside Toys, which you'll annualize Toys "R" Us after the first quarter, what the driver of that is and where is the opportunity? And then specifically on gross margin, do you expect it to be flat in 2019? Given that you're scaling the fulfillment options and Toys will create some pressure on 1Q, could we see actually gross margin start to improve later in the year and then into 2020?

Yes. So Chris, why don't I start with our approach to market share gains? And I'll let Cathy talk a little bit about gross margin. But I'll go back to our results in 2018. While we're very excited, and Mark and the entire team did a sensational job of taking advantage of the TRU closure, the BRU closures, and we took significant share in those categories, in 2018, we grew share across every one of our major categories, in Apparel, in Home. We had a very strong year in Beauty. We grew share in Food and Beverage. All of our major merchandising categories are growing share right now. We expect that to continue in 2019. We expect our growth to be driven by traffic gains, like we saw this year, equating to market share increases across both our physical and digital space. So we continue to see market share opportunities across our entire portfolio. And obviously, as we see unique opportunities, we'll lean in to take advantage of opportunities category-by-category. But for this team, they expect to take market share across every one of our major categories in 2019 and take advantage of the opportunities we see in the competitive market. Cathy, do you want to talk about gross margins?

Yes. So let's start with operating income rate first because that's the better place to start. We said that we'll see moderate expansion there this year as we think '18, 2018 was a good waypoint as we think about going forward. So we've got enough insight into headwinds and tailwinds. It'll balance. So then when you move back up, we haven't been as specific between gross margin and SG&A, but we actually don't expect a big change, right? So we already understand where the business is at. We understand Q1 is going to be a little lighter on the margin side because of a little bit of the mix business that Brian talked about in his prepared remarks. So Q1, but then the rest of year, kind of expect the balance between gross margin and SG&A and a little bit of leverage on the op income line.

It's Bob Drbul from Guggenheim Securities. I guess my first question is, around the new brands and the private brands that you've launched, I think 20 is the number, and you said there's more to come. Can you just talk about the rate going forward, what you've learned? Can you comp those businesses? And just how we should think about that aspect of it?

So let me set it up, and then I'll turn it over to Mark. And I think, Bob, it's important to recognize the commitment we've made to our own brand portfolio and the work that's being done by our product development and design teams, our sourcing teams, our merchants, the role that Rick and his team play from a marketing standpoint and then the in-store execution and experience. We've made a major commitment to making sure that we use our own brands as a point of differentiation, that we bring great style and quality to our guests at a great value. But the path we've been on and the pace is going to slow. The team has made remarkable progress in a short period of time. And I've said this a few times publicly, the team has done 3 or 4 years of work in about 18 months to make sure that we took advantage of the opportunity. We're going to be more surgical now. We'll be focused much more around making sure we're managing those brands and building brand management expertise into our teams. But we'll continue to look for whitespace opportunities and the strength in our portfolio with great own brands that drive market share gains, drive traffic to our stores and more business to our site. But the team has done a remarkable job, and it's certainly been a big part of our market share gains and the change in guest perception as we bring great newness, great quality and value to our portfolio. Mark?

Yes. Change will be a constant, but the velocity will change. So as Brian said, a compacted amount of work as we moved into a reestablished and stabilized mode of our own brand portfolio and the redefinition and curation of our total portfolio offer. And so you'll see a velocity change as we move to stabilize and optimize that assortment. The question around can we anniversary that? Yes, we can. Yes, we have. And yes, we will. So good things lie ahead, but expect the change rate to be different.

Mark, why don't you spend a couple of seconds to talk through the performance of Cat & Jack, which, in many cases, I remember standing here actually 3 years ago with many of you talking about our commitment to Baby, the Cat & Jack brand, the progress that we expected to make in that space. And obviously, Mark, that's played a big role in attracting more moms to our stores. It's been a big part of our success story in 2018, but I also think it's a great story of a brand that's continued to build support momentum on a multiyear basis.

Yes. It was a bold reinvent of a business in kids that was performing in low single-digit growth when the market wasn't. So we said, why change? And what we want to do is connect with our guests and deepen our relationship with them. Two years on, what we found is that that's a trusted and beloved brand across the U.S. And if you match that to the sense of authority that we want to create with moms, kids, babies, our most recent market share gains in TRU and BRU exit and the strength of our market share there, it really starts to build an ecosystem more authority with guest archetypes and relationships so we can be America's easiest place to shop. So Cat & Jack continues to build from strength to strength. We look at both category growth as well as year-on-year growth of existing space to really develop that strength. And what we see, even in the examples that Brian shared today, example in Home, where we had one brand and now we have up to 4 or 5 brands, the sense of the sum of the parts with the authority that we create in these individual spaces, Home, Baby, Kids, continues to be a key market share driver for us.

Kelly Bania from BMO Capital. Going back to the replenishment model, can you just give some more specifics in terms of the cost of the technology that you're putting into Perth Amboy? It sounds like maybe one of these are going to be added in next year. I guess that means 2020. And just some specifics on the financial impact on the P&L as you start to really ramp implementing those longer term. And has this been tested at any of the suburban, larger stores?

John, do you want to take that one?

I thought Brian said one question. There's about 8 there.

John, there were only 7, but we'll try to compact it down to one.

I'll start kind of in reverse. I -- we have tested a variety of things in multiple distribution centers across the country, all of them doing different things. Some of it automation. Some of it being done manually. There's one in Minneapolis that we have used as our kind of core test, and that is providing daily replenishment to a store, a large store in Minneapolis. Two things I would say. One, this is much beyond -- we showed the automation because that's -- it's easy to see you, and you can take a video of it. There is so much more going on around this. There is a new warehouse management system. There is a new order management system. We change the way we do transportation. We change the way things physically move through that building. We changed the way things physically move for the stores. So the change here is significant when we start rolling out across the country. As far as impacts, I would tell you, it's in the guidance, the long-term guidance Brian talked about. It'll be in -- it's in our capital goals. It's in the way we're thinking about the operating margins going forward. So the balance of when we do this and the cost and the payback is all thought of within our current long-term guidance. So we feel good that that's in there. We have more work to do, like I said, to figure out the exact cadence, which will mean the exact timing of when capital comes. But we want to be thoughtful here given the magnitude of what we're changing across the supply chain.

John, it might be helpful for us to spend a few minutes and make sure you understand the work that's going on really across the company from a replenishment standpoint. Because clearly, while, obviously, automation and robotics are part of the future, John, we're doing a lot of things changing how -- the sortation process in stores. It's driving immediate efficiency to how we replenish. It's impacting our in-stock position. It's reducing inefficient touches in our stores. So we might want to leave the group with a sense for the fact there's things happening immediately. Longer term, automation and robotics will enhance that, but we're not waiting for robotics and automation to drive efficiency in how we're operating our stores.

No, I think that's right. We've done many things much more manually. We've done things upstream in the distribution centers to help the stores. And as Brian said, even the way the stores work there, unload process today has changed almost 180 degrees from where we were a year ago. That has created significant efficiency for the stores. It has put more team members on the sales floor, which again is a big part of what we're doing here. We've done manual stuff in all the buildings, in how we load trucks, in how we sequence and where pallets are relative to case packs. So there's a lot of manual work being done, all of that headed toward walking down the path of where we ultimately want to get to as we bring the automation and the new order management and the new warehouse management and the new inventory planning system. All of that will come online as well in parallel. And so we're marching down the path. And again, it's cool to see the sexy automation, and that's just one piece of what we're doing from a replenishment standpoint.

Yes. But the changes we're making from a process standpoint and a system standpoint, that's also fueling this operating margin income improvement that we're projecting in 2019 and beyond. So there's more to come, but some of the foundational work that we're doing more manually is also contributing to an improved operating environment. Right. Here we go.

Craig Johnson, Customer Growth Partners. Brian, you've made great progress beginning, right here, 2 years ago in making your offerings more relevant to how people live, work, spend their money today. A generation or 2 ago, people divided up, just spending about half between goods and services. Now it's 69% service, it's 31% goods. To what extent are you all looking at the services side, which is the dominant part of the wallet, as an opportunity for you all? And if so, if you're thinking about it, are you thinking to build, buy or partner?

Yes. And Craig, we'll also -- we'll always look at ways to meet the needs of the guest. I mean, right now, our strategy is very focused, is very centered around the initiatives we've been talking about to date. We'll look at the appropriate role that services play, and we'll continue to make sure that our brand meets the changing needs of consumers. I think we go back to some foundational components, and I go back 2 years ago. Standing here 2 years ago, there were lots of questions about the role of physical stores. I think we know today that American consumers still enjoy shopping in physical stores, and upwards of 90% of the business is still done there. So we want to make sure we leverage our store assets to provide a great in-store experience. We continue to modernize the store experience. We invest in our teams to provide great customer service. In the future, we may complement that with other services. We want to make sure that fulfillment and that digital experience is really easy, really convenient. So we want to make sure that we're focusing on the needs of today's consumer but also always looking around corners to what tomorrow brings. So 2 years ago, many people were questioning whether investing in stores was the right thing to do. In the holiday quarter, our store comps grew almost 3%, and consumers continue to enjoy that shopping experience. We'll continue to make sure we look around corners and find out what's next. But we think we're on the right path, and we've got the flexibility, and I think we've proven to be flexible and adaptable to changing consumer needs. That will be part of our future as well.

It's Ed Kelly at Wells Fargo. Brian, you've had about, I don't know, maybe 50 basis points or so of pressure on the gross margin over the last couple of years from a fulfillment standpoint on digital. It sounds like what you're saying today is that you expect that pressure to start to ease. Could you just maybe give us a little bit more color around what drives that? How should we be thinking about the incremental margin or the margin now on an incremental e-commerce sale and how that's evolving over time? And then the second question I had for you is around wages. So I think I heard you reiterate a commitment of $15. That's expensive, I believe, right? So how does that play into the financial guidance? And particularly, how you're thinking about 2019?

So Ed, starting with wages, that's built into the model we talked about today. We talked several years ago about the fact that we'd be on a path to get to a starting minimum wage of $15. That's built into our plans for future years. We've talked several times today about the fact that the guest is now moving to fulfillment options that are actually more profitable for us. We expect that to continue going forward. And obviously, there's always short-term anomalies. As we thought about 2018, we didn't anticipate that TRU is closing and BRU would be closing. We made big investments to make sure that we were going to garner market share in those important categories. It's going to drive long-term benefits for us as families come to Target more frequently for Toys and items for Babies and Kids. So that was a long-term investment. Those were lower-margin categories, but it was the right thing to do during 2018. That'll moderate over time. So one of the things that we didn't talk about today but I think is so important to our overall plan is the balance of our multi-category portfolio, the fact that we had this very unique portfolio where we're growing market share across all of our categories, but they're still really balanced. 20% of our business in Apparel, a very high-margin category; 20% in Home; a hardline in Toy business, that's about 20% of our business; Beauty and Essentials being 20%; and then Food and Beverage. So we have this very balanced portfolio that I think provides us a pathway during good times and bad, where we have a durable model, where we can meet the needs of consumers no matter what the economic environment. So we expect the investments we made this year to stabilize over time. And along with the changes that we're going to make and the benefits that we'll see through new fulfillment capabilities, we expect that to strengthen our gross margin, our operating income over the years to come. So it is officially double 0 here. We didn't get to the question right upfront. Why don't we just take one more? Because your hand's been up the entire time, and I'll feel guilty if I walk off without giving you a chance to ask a question.

' Brian, it's Mike Baker from Deutsche Bank, and it's going to be one last question in 3 parts. And it's probably -- it's a financial question maybe for Cathy. But the EPS growth, which is through the midpoint of the guidance versus the adjusted EPS. It is a little bit slower in the first quarter, a little bit faster throughout the year. And I get what you said about the gross margin, but shouldn't the better sales from Toys and the like offset it? So why does it ramp throughout the year? And maybe related to that, in the first quarter, any impact from things like tax refunds, SNAP, even the late Easter? People are going to want to know about that. And lastly, and again, related to all of it, how should we think about the comps throughout the year as your comparisons get 2% to 3% harder each quarter? So one question, 3 parts, all about the pace of the year.

All right. You packed a lot in there to wrap this up.

I'm happy to take it. But -- so as we said, we'll see a little bit of pressure on the op income line in the first quarter. But to Brian's -- the guidance we gave today, low to mid-single top line, and that was Q1 and full year. So you can expect -- and you guys know what our comps for this last year, so we can think about the 2-year stacks going there. But you can expect a pretty consistent -- there's -- we're not giving guidance for second, third and fourth quarter right now. But you can expect a pretty consistent pace there, if you think about low to mid in the first quarter and low to mid for the full year. It's not hard to figure that one out. And then to your point about the EPS side, same thing. If you look at the course of the year, first off, we have to start with sales. And if we expect sales to be not too big a swing in any given quarter, you should expect a similar path on the bottom line. So that's where I would go for now. Obviously, we've put that in our guidance in the first quarter and the full year. And then no, we don't actually see a big impact in our business on SNAP or tax refunds. We do always keep an eye on that, as you can imagine. But because of our multi-category assortment, because of our incredibly loyal base of guests, we see a pretty consistent business, and we don't see the impacts there typically.

All right. Well, that wraps it up for today. Again, I really appreciate the fact that you joined us today. We got a lot of different choices. We appreciate the fact that you've been with us for the last couple of hours, and we look forward to seeing you again next year. So thank you.