Ladies and gentlemen, thank you for standing by. Welcome to Target Corporation's first quarter 2008 earnings release conference call. (Operator Instructions) I would now like to turn the conference over to Gregg Steinhafel, President and Chief Executive Officer. Please go ahead, sir.

Good morning and welcome to our 2008 first quarter earnings conference call. This morning I will share our view of the current economic and competitive environment and describe the implications of this retail marketplace to our strategy. Then Doug Scovanner, Executive Vice President and Chief Financial Officer, will review our 2008 first quarter financial results in greater depth and describe our outlook for the remainder of the year. Finally, we will open the phone lines for a question-and-answer session. Beginning next quarter when Kathee Tesija, our new Executive Vice President of Merchandising, joins us on these calls, she will provide updates on key merchandising initiatives as we have in the past. This morning we announced our financial results for the first quarter 2008 which reflect the difficult overall sales climate that we and others are experiencing, but we are disappointed in our top line growth. We are pleased with the disciplined and consistent execution of our strategy, our effective management of expenses throughout the company, our continued market share gains, and our ability to achieve earnings per share in line with our expectations. We are also very pleased with the outcome of the receivables, ownership and capital structure review we initiated last September. Through our significant investment in share repurchase activity and the completion of our innovative agreement with J.P. Morgan Chase, we believe Target will generate substantial value for our shareholders over time. In recent months we have engaged in substantial share repurchase, reducing our share count by 8% in the past six months alone. While we have increased our debt to finance this activity, we are confident that shareholders will benefit from this more concentrated share ownership in Target stock as our pace of earnings growth and share price recover. As gas and food prices continue to rise…

Thanks, Gregg. As a reminder, we're joined on this conference call by investors and others who are listening to our comments today live via webcast. Following our prepared remarks, we'll conduct a Q&A session and John Hulbert and I will be available throughout the remainder of the day to answer any follow up questions you may have. Also, any forward-looking statements that we make this morning should be considered in conjunction with the cautionary statements contained in our SEC filings. In my comments this morning I plan to cover four topics. First, I'll review several financial reporting changes that we've implemented beginning with our first quarter 2008 filings. Next, I'll review key aspects of our first quarter performance in our newly established Retail and Credit Card segments. Then I'll discuss activity under our share repurchase authorization since year end. And finally, I'll share an updated outlook for our business in 2008. First, concurrent with the appointment of Gregg as our Chief Executive Officer, we engaged in a reevaluation of our reportable business segments. As a result of this review, this morning we began reporting results for two business segments, Retail and Credit Cards. This change reflects the way that Gregg and I and others in our management will evaluate our business results going forward. This move to twosegment reporting, along with the structure of our receivables transaction with J.P. Morgan Chase, will allow us to provide more clarity into the performance metrics we report on our Credit Card segment, which I'll discuss in more detail later. In addition, we're reclassified distribution and other supply chain costs in our Retail segment, moving them from SG&A expenses into cost of sales. This change was prompted by changes we've made to our supply chain processes and infrastructure primarily related to the development of…

While the current climate poses challenges to our near-term pace of growth, our strategy is sound. We are keenly focused on superior execution and our team remains committed to delivering the constant flow of innovative and well-designed merchandise and an exceptional value that our guests expect from Target. As a result, we believe that Target is well positioned to grow profitability in this economic and competitive environment, and we feel confident that Target will continue to deliver substantial value for our shareholders over time. That concludes our prepared remarks. Now Doug and I will be happy to respond to your questions.

(Operator Instructions) Your first question comes from Deborah Weinswig - Citigroup. There is no response from her line. Your next question comes from Wayne Hood - BMO Capital Markets.

Doug, I had a credit question and then a store question. Can you talk a little bit about the delinquency and default rates on those converted accounts that you did and how that's trending, and what percent of those accounts are in Florida and California? And then Gregg, if you could speak to a little bit about the relationship with J.P. Morgan. There's the financing piece, but can you talk a little bit about how you're going to use that to drive revenues, specifically in the electronics department where you don't really have a deferred financing program to compete with the Best Buys and so on. Do you anticipate putting together a program like that? And then I had a store question.

I'll see if we can cover all of that. First of all, the accounts that were so-called product changed last year, which are responsible for a meaningful portion but not by no means all of our year-over-year accounts receivable growth, are following a very typical pattern relative to the many cohorts that preceded them of product changes, adjusted only for the fact that we're in a somewhat harsher credit environment. So the pattern of delinquencies and write-offs is somewhat higher than the higher two or three or four converted cohorts, but the pattern is virtually identical. Those converted accounts lie across geography proportionately to the rest of our portfolio, which means that both in those accounts and also in the portfolio that existed before those converted accounts, more or less 30% of our receivables lie in the four states I mentioned - Florida, California, Nevada and Arizona combined - and therefore 70%, of course, lie in the other 46 states. Our adverse experience in delinquencies and our adverse experience in write-offs is very, very heavily concentrated in those four states. With respect to the J.P. Morgan Chase relationship, I am looking forward in earnest to rolling up our sleeves, together with our credit card team here at Target and the team from Chase Card Services to find innovative ways that we can both improve the yield in our portfolio and also potentially improve the growth in that portfolio as well. We just closed the transaction yesterday and I've been kind of busy overnight preparing for some other things, so we haven't made a lot of progress in the last 18 hours. But I don't intend for much time to pass before we get together and begin that work in earnest.

And my store question, I guess, is a lot of companies have been curbing their store openings in light of the economic environment and maybe a secular slowdown. At what point in the year do you kind of reconsider your store openings for '09? You've got 116 or so this year, but at what point do you kind of think about curbing that a little bit, if at all, for the year, for next year actually.

We remain committed to opening approximately 90 to 100 net new stores that have been on a gross basis, say 110 to 120 over the last couple of years. And unless this slowdown in consumer spending is protracted and goes on for some length of time, we remain committed to the growth levels that we have described in the past, and we believe that it's appropriate for us to still grow at that 90 to 100 store mark.

Your next question comes from Charles Grom - J.P. Morgan.

Doug, can you touch on the other categories a little bit more granular for us where you saw some strength to help offset the 70 bip increase in mix pressure?

Certainly. We had a number of things fall our way this quarter in a favorable sense to our original plans. First of all, I mentioned that in a number of merchandise categories across our assortments we enjoyed the benefits of a wider gross margin rate. And that went a very long way in this quarter toward offsetting the adverse sales mix pressure on gross margin rate. Separately, even though our expense rate was up a bit in the quarter, we clearly achieved more than 100% of what we set out to achieve in expense savings. And finally, I would point out that in both the areas of our income taxes and in the effect of the timing of our share repurchase program, we benefited EPS as well. So the collection of those four influences all in the positive direction more than offset in this quarter the adverse sales and related mix impact that we experienced

Let me just ask the question a different way, then. Which categories did you see a little bit of a wider GPM rate?

Well, we saw expanded margin rates in more of our hard lines businesses than in home or apparel. Home and apparel were essentially flat between the two of those, and both our food business and our other hard lines category had slight margin rate expansion.

And then another one, Gregg, for you, just as you look to the back half, managing inventories, future receipts, can you give us sort of how you think of planning inventories for the back half of the year, either on a per square foot or per store basis?

Yeah. We continue to take a very cautionary approach to our sales and receipt management, and until we see some underlying change in the environment and see a strengthening in the business, we're going to be very tough minded as it relates to the receipts that we bring in. So we're going to stay focused on same-store sales in the range of what we have been experiencing in the first quarter until we get into the fourth quarter. We expect some uptick in the fourth quarter, but it's still going to be on the conservative side until we get a better feel for what the environment's going to be like. So, I mean, we've got a lot of average inventory in our network. We can absorb selling into our inventory without risking being out of stock in any category that's important to our guests.

Let me put a few numbers around that, if I may. At quarter end, our year-over-year growth in square footage was 9.0%. Our sales growth in the quarter was 5%, and our growth in inventories was right in the middle, about 7%. So we're in great shape moving into the second quarter despite the softness in our sales.

And then one more, Gregg, for you - or Doug, for you - just on the interest expense line, $200 million, can you give us a sort of sense for what you think we should be thinking for the balance of the year? Obviously higher year-over-year, but either an absolute dollar number or basis point guidance?

Well, as I mentioned in my remarks, the rate is actually modestly favorable because, of course, fed funds at 2% today are sharply lower than they were at this point last year. A lot depends on the actual pace of our share repurchase program. That would be a good reason to increase interest expense. But I think with a broad brush on it, you can think maybe $900 million for this year, and obviously with wider than normal variation around that theme based on the pace of receivables growth and the pace of share repurchase that are clearly variables in the fall at this point.

Your next question comes from Deborah Weinswig - Citigroup.

In terms of, Doug, if we look at 2008 comps versus a year ago, if we look at a two-year stack, obviously it was negative in the first quarter. Is there anything that, as we look to the rest of the year, that we should think from a twoyear stack perspective that things would improve from here?

Well, the first quarter was negative this year, but certainly not negative in a two-year stack.

Right. The two-year stack was a 3.6, but you're facing a 4.9 in the second quarter and a 3.7 in the third. If we see the same trend, it would potentially indicate negative comps in the second and third quarter.

Well, I think that first of all we've already gone on record to tell you that May is likely to lie in the range of minus 1 to plus 1. There's nothing particularly unique about June and July combined that on an aggregate basis would lead me to expect something very different from flat plus or minus here in Q2. As we move into Q3 and Q4, a couple of things are very important analytically. First of all, even though our total sales in Q3, our total comps in Q3, last year were still quite strong, our comps in the higher-margin apparel and home categories were not. So in Q3, even though our reported comps may not be that strong, the underlying financial health of generating gross margin dollars year-over-year is not something I expect to be quite as challenging as Q2. Q4, by contrast, had much softer sales overall. In other words, the comp trends in home and apparel were about the same in Q4 as Q3, but the big difference was that in Q4 our sales growth in the lower margin categories cooled off a bit.

And with regard to what you're seeing in May thus far, is that more related to what you're seeing with regard to seasonal businesses or any impact from the fiscal stimulus?

We have not historically in any recent times made any comments mid-month, and I don't think we should depart today. We'll give you a full color story on the month of May when we report our results in early June.

And then, Gregg, you talked about the heightened focus on frequency driving businesses. Can you elaborate on that comment?

Yes. I mean, in this environment, we've been working hard to accentuate the pay less side of the brand promise. So it's the selection of merchandise we put on our end caps, making sure we have strong value messaging, that our circular messaging and print marketing has a much more dominant impact around price and savings and value in addition to what we typically would do in terms of differentiation and seasonal content. So we're just very mindful that the consumer is very cash strapped right now and is looking for good values. They're expecting more sale merchandise, and we are responding by ensuring that our assortments reflect their desires.

Can you also elaborate a bit in terms of your pharmacy business at the moment, some of the recent initiatives that you have embarked upon, and if that is also helping drive traffic to the store?

Our pharmacy business continues to be very healthy. It has grown at double-digit same-store sales for a number of years, and this year is no exception. We continue to match Wal-Mart on price in their $4 generic and now their newly expanded $10 generic program for a 98-day supply. So we're very, very competitive in the business. We offer terrific service in both the Rx and OTC and other health care products within our stores. And it's been a good solid growth business for us, and we expect that to continue.

Your next question comes from Adrianne Shapira - Goldman Sachs.

Thank you. Gregg, just following up on your comments on the marketing message on the pay less, could you help us understand over the near term, with the fiscal stimulus checks heading out, what if any changes or what efforts you are enacting on the marketing front to perhaps gain a greater share of those checks?

Well, I think the best way to really look at the marketing message would be what is the point of sale messaging that you see in our stores, on our end caps, and then secondly, what is the message that we are conveying in our weekly circular that's delivered to 50-plus million households. And if you go through our circular you will see that we have a much stronger headline commitment speaking to value and savings, the way we've organized products, the way we've highlighted headlines, focused on value, how we've aligned our frequency businesses and created bigger, more dominant statements within that circular and calling greater attention to the pricing. You compare the circular today versus a circular that we had published six months ago, you will see differences in the messaging, and you will see a much stronger narrative speaking to the value side of our brand promise.

In light of that, could you just talk about, you had mentioned you believe you're appropriately positioned, sort of the good, better and best, but give us a sense of how customers are shopping. Are you seeing more of a trade down to the good category especially as you're highlighting the price emphasis?

We're seeing some trade down throughout the store, and we're also seeing our guests not shop in the more expensive discretionary categories. So for example, in our seasonal business, which is seasonal lawn and patio, which is soft in every other retailer as well, we're seeing very robust growth in replacement businesses like seating and cushions and some of the accessory categories, but we're not doing well in sets. So the mix of those two still will generate same-store sales declines, but it's healthy in one part and it's not so healthy in the other side. In our domestics business we're seeing terrific growth in our towel business and in our Valley of [Sheet] World, so people are coming in and they're buying replacement pillows and sheets, but they're not buying the entire ensemble of top of bed and shams and duvets along with their sheets. So it's more selective purchasing on the consumer's part.

Which takes a very careful analysis to interpret trading down. This is a shift of units more than a best to good kind of shift.

And then, Gregg, just on the inflationary pressures, as we're heading into the back half maybe give us a sense across categories what you're planning, and given the obviously current challenging top line environment, how do you expect to deal with those pressures?

Well, we'd love nothing better to have the inflationary pressures go away. As you know, more of the food and the consumables were the leading edge indicators of what was happening, and we've been experiencing some inflation in those businesses since the fourth quarter and throughout the first half of this year. As we move into the year we're seeing more inflation in those other discretionary categories where we typically haven't seen them in the past. So there is some slight inflation in apparel due to raw material costing out of China, transportation expenses and lack of subsidies. And then other categories such as home products, we're seeing greater levels of inflation in the higher single digit and low single digit, and our response has always been to work with our suppliers so that we don't have to accept them or we can delay them or we can accept a smaller portion of them. But if they do come to us and we have to accept them, which in some cases we do, we're looking to pass those along in the marketplace as a matter of last resort. But we're planning on increasing retails in those businesses where we have to absorb some of these price increases.

So just to be clear, in home about 9% to 11% and apparel more in the low single digits, is that their range?

Yes, I would say apparel is in the very low single digit. It's a couple of percent. But that's up from a deflationary environment in the past. And I wouldn't say that all of home categories are in the 9% or 10%. I'd say there are some selected categories that have greater pressure than others. I would say in general it might be in the 5% to 8% range, the high end being in the 9%, 10%, 11%. In some categories it's in the 2% or 3%.

And then just lastly, Doug, just on the 30 million in terms of the exercising of the options, it sounds like there's another 10 million to go. I think on the last call you had mentioned you would expect to exercise the options in April through June, so should we expect the remainder to be completed in the second quarter?

Yes. As we disclosed in our 10-K, there were three series of derivatives with expirations in April, May and June respectively. So what we've said today is that we have exercised all of the options with respect to the first two series, and the final series - which is reflective of the option to purchase 10 million shares, precisely 10 million shares expire on various dates in June.

Your next question comes from Jeffrey Klinefelter - Piper Jaffray.

Gregg, I just wanted to go back and revisit the margin gains or expansion that you achieved in the first quarter in the nondiscretionary categories again just to be clear. You were able to negotiate some better margins with some of your hard lines products. Could you go a little bit further into that, and was that the result of negotiating different terms with the vendors? It sounds like it might not continue at that pace based on Doug's comments. Can you put that in context of the source of that and why it wouldn't continue or how it was negotiated?

Sure. Let me go through the story in general. In both soft lines and homes, we were thrilled with the margin rate performance in the first quarter in spite of those categories being especially hard hit. We managed their receipts very well in those categories, so our clearance markdowns were lower than prior years and we were able to maintain good strong initial markups. We also had markdown favorability in our hard lines categories as just part of our ongoing initiatives to be smarter in how we invest our promotional markdowns, manage our mix, manage our clearance markdowns, and pass along some of the price increases that we've received while maintaining the same margin rates. We've had some slight expansion in some of those categories. Not all categories, but enough categories to move the needle in the hard lines businesses. So overall it was a good combination of effort throughout the store to offset the majority of the mix deterioration with some margin rate expansion.

So it was more of an inventory management as opposed to some new negotiations with your vendors?

Well, it was clearly inventory management on the home and apparel side. It was the combination of things that I mentioned on the hard lines side. It's also a continuation of our emphasis to build our own brand, both in food and nonfood categories. And as you know, they hold or carry significantly higher margins than the national brands and our food brand penetration continues to grow. And our hard lines brand penetration is growing as well, and so that helps mitigate some of the margin rate pressure and gives us some expansion capability.

And would you expect that environment in general in balance to continue through the rest of the year, those different offsetting factors on gross margin?

We're hopeful. I mean, we're planning our business cautiously and provided that the competitive environment remains rational and stable like it is today, I mean, it's still very competitive but we have been able to pass through some of these cost increases in the marketplace. And if that continues throughout the year and we're able to manage our business as we have and invest wisely, it's our every intention to be able to manage the gross margin rate deterioration to traditional levels.

In terms of pharmacy being a strong business for you comp wise and a traffic driver, as you look at it in terms of basket analysis, you know, where you have a pharmacy transaction versus where you don't or the chain average, what are you seeing in terms of the mix of that basket? Is it favorable in terms of the overall transaction size, the margin mix? What is it driving in your store in terms of other sales?

Like our Red Card baskets, the pharmacy guest at Target's a very important guest to us. They visit us more frequently than the average guest, and their baskets in general are larger than the typical transaction at Target.

It's hard to determine precise cause and effect, but there's a very high correlation across a lot of traits, as Gregg mentioned. A pharmacy guest tends to visit the store a lot more often. Only a subset of those trips include pharmacy purchases.

Your next question comes from Robert Drbul - Lehman Brothers.

First, can you talk about the comp trends in the SuperTarget stores versus the Target stores? And Gregg, can you elaborate a little bit more on the trend in the apparel business, what's working, what's not? And are you changing any square footage allocation in the categories that are struggling a bit in the stores today?

Yes. Comp trends in SuperTarget and a general merchandise store, give or take, are very consistent with one another, plus one month, minus a little. But on average, for some period of time now, they've been within a very close range with one another. And I'd love to be able to tell you that there's a lot of exciting trends in apparel right now, but we'd settle for some positive same-store sales growth in any one of our apparel divisions. Our Converse launch has been successful to date, in both genders and in every category, so we're really pleased with that business. And then there are, you know, selected businesses that are doing slightly better than others. Our performance active wear business and intimate apparel is doing exceptionally well this year. Our footwear business is pretty healthy this year. And so as the weather is turning and we're starting to see a more traditional pattern, we're starting to see some better trends in apparel and footwear than we've seen early in the year. But overall it's still a business that's discretionary in nature and under some pressure, like you're hearing from the other retailers.

Curiously, we continue to gain a lot of market share in those categories despite the current environment, maybe even because of the current environment.

And are you changing, in terms of the square footage allocation, are you cutting back on any areas in the store?

Not in a meaningful way. Our prototypes evolve and every new cycle we constantly make small adjustments to our businesses. And our Apparel World is and has been fairly consistent over time. We've made some slight modifications, strengthening our presence in ladies and kids and infant and toddlers, and we've edited down some space in footwear and men's. But there hasn't been any significant changes, and we don't really anticipate changes in the future.

Your next question comes from Gregory Melich - Morgan Stanley.

I have two questions. First, Gregg, I wanted to get a little deeper on the buy for the third quarter and second half. It sounds like you guys are being cautious, and the way I'm reading that is maybe buying for a one or two comp in the third quarter. And how late, given your lead times now, do you have to decide what you buy for the fourth quarter?

Well, let me take your second question first. We're basically at that time of year that we're finalizing or getting close to finalizing our purchases and sales for the balance of the year. As Doug mentioned, we had three quarters last year of pretty decent sales growth in the mid-3 plus range in Q1, Q3; a little stronger in Q2. So we're planning those businesses in total, give or take, around flat with greater on the consumable and food side of the business and softer sales in apparel and home. As we think about fourth quarter, we think there will be some rebound in sales due to the fact that last year was a flat quarter. So we're not expecting mid-digit comps, but we're hopeful that we should be able to deliver a low single-digit comp during the fourth quarter, and we're planning our purchases to reflect that type of sales environment.

And then within that are we assuming - it sounds like inflation in that low single-digit comp is going to be up a couple hundred basis points than it would have been in the first or second quarter.

Well, we calculate that on a storewide basis at the end of October every year. Last year it was slightly deflationary, which was a combination of more deflation in some of our hard lines categories like electronics, and then slight inflation in other categories. It really remains to be seen where it shakes out because there's both inflationary and deflationary pressures throughout the store. I would say on average there's slightly more inflationary pressures this year, but it's really too hard to tell what that will really mix out by the time we get to the end of October and the balance of the year.

I think you're on the right path, though, Greg. Clearly, food categories right now need a lot of careful interpretation as to our comps or anybody else's comps. CPI measured food inflation April this year versus last year is nearly plus 6. So anybody that's running less than plus 6 in food is either experiencing some trading down in units or a reduction in unit sales. Apparel, by sharp contrast, year-over-year was slightly negative as measured by the CPI April versus same point year ago. It wouldn't surprise me if that CPI measure of apparel goes slightly to modestly positive by the time we get into the - toward the end of this year. And of course, we end up having a very strong market share in units and continue to grow market share in apparel categories in this environment.

And then a follow up, Doug, just to make sure I'm getting the credit yields right on the new way you're reporting. In the past you've talked about a 7% yield, give or take, for this year. Is that a little bit lower now using LIBOR as the cost?

We could provide a detailed reconciliation of the old method versus the new method offline with anyone who's interested, but overall as I look across the rest of the year by as much coincidence as coincidence - let's try that in English - I think that generally speaking for the year that’s not a bad assumption. I don't think 7.00 but range 7% as opposed to 6% or 8%.

Your next question comes from Uta Werner - Sanford Bernstein.

I wonder if you can please give me some color on SG&A. I wonder if you could highlight which of the line items were experiencing some deleverage and which ones were benefiting from the strong cost control?

I'm going to approach that question in two ways. Our strong cost controls yielded lower expenses in dollars across all categories than our expectations at the beginning of the quarter. That's great news. The bad news, of course, is that we missed our sales plan by an even larger percentage, and so we deleveraged slightly. Looking forward, I expect to continue to enjoy the benefits of a very broad-based expense control program in dollars and to a significant enough extent that unless sales get worse I would expect even better rate performance year-over-year for the balance of the year than we enjoyed in the first quarter. A lot of individual items in any quarter - timing issues, issues in the base and so forth - so I don't mean to sound like there's a litany of excuses for a bit of rate deterioration in Q1, but as we sort through those issues looking forward, I don't think we're likely to see that kind of rate deterioration for the balance of the year. And that will go a long way toward offsetting those mix-related pressures in gross margin rate that we've talked about.

Doug, could you please be a little bit more specific on how the labor scheduling is working out in the stores?

I don't know what you mean by a little more specific on labor scheduling. What aspect of labor scheduling would you like me to focus on?

Just in general, on how successful you've been in keeping labor costs in check at the store level.

Well we have for quite some time had an excellent tool for scheduling. This is not a new issue, Q4 last year or Q1 this year. We have been quite adept over the last two quarters. Those two quarters in particular have shown remarkable productivity gains in contrast to the kinds of productivity performance that we turned in over the prior several years. These are basic issues of trying to get our labor in balance as best we can with the pace of sales, and we have been quite adept at that, importantly, without sacrificing any guest service standards. And we are religious - perhaps even fanatic about measuring guest service standards in each and every store, each and every month.

Let me just add, Uta, that we've invested heavily in technology in the past in productivity saving measures, and some of those investments we have made in mobile technology in our store and in our supply chain are driving these productivity improvements in our stores as well. So it's a combination of just good discipline and the productivity that we're getting from good investments.

Your next question comes from Virginia Genereux - Merrill Lynch.

I've got three quick ones. Doug, I'm surprised that your interest expense would be even as low for the year as you're talking about considering the January offering and the J.P. Morgan deal. Are there any gains on debt repurchase or hedging unwinds that are in there? And can you also tell us how much of the $17 billion debt balance is effectively floating?

First of all, there's nothing tricky or mysterious one level under the surface. I would point out that we disclosed as a subsequent event in our 10K - and I'm happy to go through this in any level of detail that anyone would care to that we unwound over $3 billion worth of our interest rate swaps subsequent to year end early in Q1. And we collected $160 million in cash from the various counterparties involved in those transactions, and that will amortize in the normal course a little over $40 million as a credit against interest expense for the year. In essence you should think of that as having fixed some of the variability in a $3 billion portion of our floating rate debt. Stepping back to answer your second question, generally speaking, over time we maintain floating rate exposure equal to or slightly greater than our floating rate asset base of card receivables. At the moment, depending on how you think about that $3 billion worth of debt where we at least temporarily removed the hedges, quite literally our debt today is not responding to floating rates at that same pace as our assets, but I have an expectation that over time we're likely to put some if not all of those hedges back on. By the way, the $160 million we collected, had we waited until today to unwind those same derivatives, we would only collect in the range of $100 million, not $160. So clearly, our timing has been quite good in hindsight.

You earned your salary this year, Doug. And secondly, you were good enough to tell us what percent of the receivables were, I think, in those four - what percent of the credit receivables were in those four trouble states. Can you tell us what percent of the accounts that were converted from Red Card to Visa sort of last spring were in those four states?

About the same percentage. We did not discern by geography to offer our guests the opportunity to have us change their products. So it was in the same 30% range.

And then just for you, Gregg, the SG&A, I think at one point you said most of the SG&A sort of cost initiatives would be sort of realized by the second quarter. And did you achieve some of those quicker than you thought in the first quarter, or is that still the timing that's enabling you to control this SG&A so well?

Well, as Doug said, we expect the SG&A gains to continue throughout the second quarter and the balance of the year, so this is not accelerating forward into Q1 gains that we were expecting to achieve in Q2 that we will now not be able to accomplish. I mean, we have a very disciplined approach to SG&A the entire year. The entire enterprise is doing a marvelous job focusing on expenses, and we expect that same kind of performance throughout all of '08.

And even at a slower rate, I would expect, based on - a slower growth rate, I would expect, based on your comments because it was a tough compare against a year ago because you had deferred this spending and opened fewer doors. I mean, considering that, I think your rate of SG&A dollar growth, if it was 6 this quarter and high 5s even adjusted for the excise tax, Doug, that the rate of growth in absolute dollars is going to slow further.

Or the pace of sales will increase from 5.0% overall given the fact that we now have 9% year-over-year growth in our immature square footage.

Your last question comes from Daniel Binder - Jefferies & Co. Daniel Binder - Jefferies & Co.: It sounds like the category improvements that you saw or gross margin in categories that you saw, some of it was more inventory management, some was more structural and the trade down on private label or maybe a greater percentage of private label. I'm just curious if you can give us an update on what the private label mix is in food and general merchandise today.

Well, in the store in total it is somewhere in the 35% to 40% range. It depends upon how you define private label and whether you're doing exclusive signature national brands like we have Eddie Bauer and a Converse brand. But I think 35%, 40% is a pretty good range. We continue to add 200 to 300 basis points per year in food, and I expect this year to be no different than what we've achieved in the past so we should be pushing the 20% range by the end of this year. Daniel Binder - Jefferies & Co.: And was there an especially exaggerated mix in the second quarter that allowed for the better gross margins versus what you're expecting for the full year?

Not at all. Actually it was more adverse related due to the softness in both apparel and home. Daniel Binder - Jefferies & Co.: And then just as a point of clarification, did you say that the SuperTarget stores were trending comp-wise similar to the regular?

Yes, I did. Yes. Daniel Binder - Jefferies & Co.: Is that surprising, I guess, given the food, the high food - and, I suspect, heavier traffic as a result I guess I would have expected that store to be trending maybe a little bit better.

No, I think there is, first of all, there's a stronger food component in all of our general merchandise store. And secondly, our SuperTargets are in very, very competitive markets. A greater share of our SuperTargets are directly competing against Wal-Mart Super Centers than our general merchandise stores. So we believe that environment, that food environment, is slightly more competitive. But overall, it's very similar between the general merchandise store and a SuperTarget. Daniel Binder - Jefferies & Co.: And then, lastly, on the value message, while it's not clear whether this consumer downturn will last more than another nine months, if it were and as we progress through the year it becomes clearer that there's greater streams, would you imagine that Target could step up the level of value message with more perhaps onetime sale events or a greater message on that side?

Our strategy has been and continues to be expect more, pay less. We put a greater emphasis on pay less. I don't really see us ever doing things that would undermine the long-term brand attributes that we've been trying to build over a long period of time. So we're not about to embark on things like one-day sales or mid-week ROP advertising on hot commodities or things like that. I just - and we don't, as a leadership team - believe that's in our best long-term interest. We're going to continue to focus on what we do best, and that is delivering a superior guest experience, having innovative merchandise freshly brought into our stores, and we'll focus on the value. And in this environment, we're going to focus a little bit more on the value. But we're not going to skew the expect more, pay less brand promise to an inappropriate level.

That concludes Target's first quarter 2008 earnings conference call. Thank you all for your participation.

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