Target Conference Call Highlights

reported its fourth quarter earnings on Tuesday. Shares of the company are up 7 percent. Below are some key highlights from its conference call.

• Our adjusted earnings per share of $0.54 was better than our guidance of $0.40 to $0.50 driven by U.S. segment comp sales growth of 1.2%, which is also better than our expectations. • Importantly, the U.S. segments saw positive comps in all three months of the quarter and we're encouraged that the pace of U.S. traffic continues to recover from a very challenging trend earlier then the year. While U.S. traffic still declined slightly in the third quarter, performance was more than a full percentage point stronger than traffic trends through the first half of the year. • As we mentioned, in our second quarter earnings call, we saw a strong start to back to school and to the back to college season. And that strength continued in September. Like many others, our sales flowed as we entered October, but recovered nicely towards the end of the month as we approached Halloween. • While our Canadian segment continues to see robust year-over-year growth, third quarter sales in Canada fell short of our expectations. • First, we will provide strategic clarity to the team. • Second, we'll articulate what Target stands for in today's retail marketplace. • Third, we will thoughtfully prioritize what we do, applying discipline to ensure we're focused on work that adds the most long-term value. • Fourth, we'll invest resources and build capabilities to support our priorities so the team is equipped to deliver on these goals. • And finally, we will foster a culture of accountability at all levels of the organization.

• First, Omni channel and flexible fulfillment capabilities are key to our long-term success. • Target's digital sales are growing much faster than the industry. • Second, we're defining how we'll strategically segment our categories and increase our focus on signature categories we can, and should be known for. • Categories like baby, kids, wellness and style. Over time we will work to grow these areas more quickly by investing a higher share of our resources including capital, marketing and product development. • Importantly, this view of segmentation doesn't mean we're abandoning our other categories. • Looking ahead, we know our identity in food will continue to involve a combination of national brands and our own and exclusive brands with increased emphasis on natural and better-for-you products. • Third, we know that localization and personalization will be a key focus going forward. • 15 years ago, all Target stores were virtually identical and were focused on providing consistent assortment and experience across the country. • In today's world, we need to continue to maintain our brand standards across every store but our guests expect each of our stores to reflect the local communities in which they operate. • In the past, we've taken some initial steps to localize our store environment and assortment but we've only scratched the surface of this opportunity. • Similarly, Target's digital experience will become increasingly personalized for every guest. • In the near term, we are focused on strong execution of our fourth quarter plans in both the U.S. and Canada.

• Third quarter U.S. traffic was down slightly from a year ago, but we're encouraged that our traffic trend has improved meaningfully every quarter this year. • Consistent with year-to-date trends, average ticket increased 1.6% in the third quarter, driven by growth in average retail per item, particularly - partially offset by a decline in items per basket. • At a category level in the U.S., third quarter comparable sales performance was strongest in Healthcare and Beauty, led by Beauty. • Third quarter comps in Home were up in the low single digits, with particular strengths in seasonal categories benefiting from back to school/back to college sales early in the quarter and late quarter strength in Halloween. • Third quarter comp sales in Grocery were up in the low single digits and Hard Lines was up slightly, led by Toys, which saw a high single-digit increase on Strengths. • We completed the rollout of our new apparel fixtures and layout to an additional 600 stores bringing the total to about 650 locations featuring this enhanced presentation.