Ladies and gentlemen thank you for standing by. Welcome to the Target Corporation’s fourth quarter 2008 earnings release conference call. (Operator Instructions) As a reminder, this conference is being recorded February 24, 2009. I would now like to turn the conference over to Greg Steinhafel, President and Chief Executive Officer. Please go ahead sir.

Good morning and welcome to our 2008 fourth quarter and year-end earnings conference call. This morning I will briefly review our performance and discuss the actions we are taking to improve sales, capture market share and increase profitability in this challenging economic environment. Then Doug Scovanner, Executive Vice President and Chief Financial Officer will discuss our financial results and outlook for 2009. Next, Kathy Tesija, Executive Vice President Merchandising will describe initiatives we are pursuing in support of both the Expect More and Pay Less side of our strategy. And finally we will open the phone lines for a question-and-answer session. As the economy contracted at its fastest pace in decades during the final months of 2008, Target experienced challenges in both our retail and credit card segments that resulted in a decline in our fourth quarter financial performance. In our retail segment our results were characterized by a fundamental change in consumer spending patterns that negatively impacted both our traffic and sales, particularly in higher margin discretionary categories like seasonal, apparel and home; an elevated level of markdowns resulting from weaker than expected sales and intense promotional activity across the retail industry; and exceptional expense control, particularly in our store hourly payroll. By carefully managing our inventory levels and taking appropriate pricing action to remain competitive, we continued to capture market share during the holiday period and we were able to exit the year in a very clean inventory position. In our credit card segment our performance, like that of other credit card issuers, was adversely affected by the deteriorating risk environment. As a result, we incurred higher than expected bad debt expense as we wrote off accounts and added significantly to our reserve in anticipation of additional write-offs of receivables in 2009. While we cannot control the broader…

Thanks Gregg. As a reminder, we are 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 as a reminder, any forward-looking statements that we make this morning are subject to risks and uncertainties, the most important of which are described in our SEC filings. This morning I’ll first focus my comments on the fourth quarter and full year 2008 results in our retail and credit card segments. Then I’ll discuss some current trends and themes surrounding our generation of cash flow and how we intend to apply it in 2009. And in conclusion I’ll provide some clarity on our outlook into 2009 and beyond. Let’s begin with a view of our retail segment performance. On the sales line we recorded just under $63 billion this year, in total up 2.3% from 2007, although on a same store basis we were down 2.9%. As you know our fourth quarter sales performance was much weaker than our full year performance despite an easier base of prior year sales comparisons. Specifically, our fourth quarter total and same store sales metrics were three to four percentage points weaker than our full year performance as the effect of sharp macroeconomic deterioration played through our sales equation, especially on our more discretionary apparel, home and seasonal categories. We successfully promoted our way to an ending point of very clean inventories, but at the short term cost of some additional gross margin rate pressure. Ultimately, we delivered about $5.9 billion of EBITDA and $4.1 billion of EBIT in our retail segment for the year. These…

Thanks Doug. As Gregg mentioned the current economic conditions have created a fundamental shift in shopping behavior as consumers seek ways to stretch their dollars and pull back on their purchases of discretionary items. In this environment, Target is keenly focused on delivering a merchandise assortment and experience that meets our guests evolving expectations for price, quality, newness and convenience without compromising core elements of our brand. We believe Target’s record of innovation and our balanced Expect More, Pay Less strategy uniquely positions us to continue to capture meaningful market share growth in this climate. To remain relevant to our guests and achieve our financial goals, we are focused our attention on initiatives that increase shopping frequency and help guests better understand the exceptional value and quality of every Target shopping trip. For example, in our new and remodeled stores we are allocating more shelf space to non-discretionary categories such as food; household; personal and baby; and healthcare and beauty products. And we’re leveraging our marketing vehicles to drive awareness of this merchandise. In our weekly circular we’re devoting more space to frequency driving categories and using themes to drive trips and basket size. And we’re leveraging receipt marketing and vendor funded program. But we know in today’s economy that guests won’t come to us for their everyday necessities if those necessities aren’t priced right. Our competitive shop process which has been a consistent element of our strategy for well over a decade insures that we are priced within one to two percentage points of Wal-Mart on like or identical items within local markets. However, guest perceptions do not reflect this reality. As a result, we are intently focused on improving perception so guests understand that not only are we the right destination for all their needs, but we can…

Target is intently focused on driving profitable sales and honing our position as a one stop destination for all of our guests’ wants and needs. While we are experiencing challenges not seen before in our business, we believe we are in a unique position to capitalize on the opportunities and leverage our iconic brand, singular vision and talented team to transform Target in ways that will resonate with our guests well into the future. We are as committed as we have ever been to sustain our competitive advantage and create substantial shareholder value. That concludes our prepared remarks. Now Doug, Kathy and I will be happy to respond to your questions.

(Operator Instructions) Your first question comes from Deborah Weinswig – Citigroup. Deborah Weinswig – Citigroup: Gregg you talked about investing in this food offering and I think you specifically said you would further enhance your assortment in dry, dairy, frozen and also adding perishables. Can you help us think about how the stores will look compared to maybe what we saw at the analyst meeting back in October?

Yes, I would – by the middle of this year all of our or the majority of our single entry stores will have the same look and feel as you observed when you were in the downtown store last fall. So we continue to be very pleased with the sales of that concept; the look, the feel, the assortment. We’re still making some changes but that seems to continue to perform well enough to introduce that as a prototype element in the majority of new stores going forward. Deborah Weinswig – Citigroup: And then with regards to private label I think Kathy said that current penetration as we said was about 20%. I know previously you’d given guidance for about 300 basis points increase per year. At 20% that’s obviously pretty significant penetration. How should we think about that going forward?

I think you can still plan on an increase in that 200 to 300 basis point range on a per year basis. In a couple of years when we get into the upper 20s percent penetration in all likelihood that will slow down as we start to maybe top out a little bit more. But for the next couple of years we still believe that there is some reasonable opportunity to increase our penetration a couple of hundred basis points per year. Deborah Weinswig – Citigroup: And then lastly with regards to the consumer perception with regards to your pricing, in the focus groups that you’ve done what is the consumer telling you with regards to what it’s going to take in terms of narrowing the gap between reality and what they think in terms of your prices - your largest competitor?

Well, I mean, we’ve been testing a lot of different concepts. And one of the key themes that has come through in our guest research is the fact that and what’s resonating with them is the fact that they’re surprised that our prices are as good as they are and as close to the competition as they are. So we’re going to be playing on that aspect and playing on the fact that moms as the head of households are responsible for the family budgets; are more savvy; and come to realize that Target is the place for both their wants and needs. They will have a great experience and they’ll be surprised and delighted by the low prices that they find in our stores. Now how we execute that across the various mediums that we have will roll out over the next couple of months, but I think you’ve seen some of our more recent campaigns in broadcast. For example, our New Day campaign plays on that. Our Essentials campaign where we have national brand item at a price plays on that as well. And both of those campaigns have been very, very well received in the marketplace. We’re also trying to convey a savvy, smart approach in our circular messaging. So everything that we do broadcast, in store circular is meant to try and narrow that perception gap that exists today.

Your next question comes from Robert Ohmes - Bank of America/Merrill Lynch. Robert Ohmes - Bank of America/Merrill Lynch: The first question is I was hoping you could maybe comment on what you think the sales impact from the markdowns or inventory clearance that you did in the fourth quarter was. And then as you look forward, you know, where do you think, you know, in terms of clearance levels or markdowns that are where we should be thinking, you know, markdowns could look like in the first half and what that impact is on, you know, same store sales. And then second the new store productivity levels looked I think low on my calculation for the fourth quarter. Can you sort of comment on if there’s an abnormal variance between, you know, how your new stores are performing versus what the same store sales in your existing store base would imply they should be doing? Thanks.

I’ll take part of this and Doug will take part of this. The sales impact related to clearance in the fourth quarter and particular December, January is probably in the range of 50 to 100 basis points. It’s a little hard to quantify exactly but I think that’s a pretty fair range. As we enter 2009 our inventories are in exceptionally good position. So unless there is a material change in the economic environment, we really don’t expect to see rate – gross margin rate deterioration due to markdown performance. We will continue to have the impact of the mix pressures on our business, but we’re in great position from an inventory standpoint. As it relates to the new stores, just like the existing base our new stores are affected by the same macroeconomic factors and are slightly softer than what we had expected them to open at. But there isn’t any meaningful change in how our new stores performed given the environment.

And I would remind you that there’s a huge amount of volatility in the mix of new stores that we opened, and therefore even when everything is working as well as we would expect it to be, there is substantial volatility in the sales per square foot of these immature stores, quarter-to-quarter. Robert Ohmes - Bank of America/Merrill Lynch: So when you look at the fourth quarter do you think the, you know, the inventory clearance though drove traffic or enhanced your sell through rate significantly so that as you move into a period where you’re not doing that any longer we might see more pressure on your same store sales? Or should we be thinking of it differently?

The way I would think of it keying off of Gregg’s comment is that all else being equal it drove a half a point or a point of incremental comp store sales in the quarter. And that is half a point to a point of missing sales if you will relative to trends. That’s the reason why among others I think that the right way to read our current business is give or take, down mid single digits in same store sales.

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

So the mix impact to gross margin profit, was that about 70 basis points in the fourth quarter Doug?

Mix impact was closer to 60 to 70.

And that’s your expectation to stick with over the next couple of quarters and into the back half? Or would you expect that to improve given easier comparisons in the back half from a mix perspective?

I think it’s a little premature to be describing the back half of 2009 in that level of detail. Certainly as we enter the front half of 2009 I think that’s a good working figure.

And then just the markdown rate you wouldn’t expect to continue?

The incremental markdowns we do not expect to continue. We exited with very clean inventories and today have inventories that appear to be well positioned in the aggregate relative to sales.

Again based on how precipitously our November and December sales dropped off from prior trends, we could not – we didn’t anticipate that kind of fall off. And so we had goods in the pipeline that were coming regardless of the sales environment. We’ve been able to reset and get our spring sales forecast in the higher risk, seasonal discretionary categories established at a pretty consistent trend level. So we feel pretty good that we’ve got the sales and the receipts matched up appropriately as we look forward into 2009.

Even in the aggregate our inventories despite having 91 more stores are 1% lower than at this same time last year. And that’s another indicator of why we feel comfortable with our inventory position.

And then just moving down the P&L, Doug, your SG&A control you said was very good. How are you guys thinking about that line item in ’09? Do you think it’s possible that dollars are down on an absolute basis or could they maybe be flat?

No, I don’t think dollars will be down or flat. I think there were some unique factors that helped boost this in Q4 and I think that keying off of the comments I made earlier about our retail segment outlook for the front half of the year, if we do indeed deliver negative mid single digits in same store sales, clearly we would expect to see some meaningful SG&A rate deterioration. And dollars would be up not down.

Your next question comes from Jeffrey Klinefelter - Piper Jaffray.

Yes, a question for Kathy. In terms of your strategy for the discretionary side of the store, do you look at this in terms of a core customer response to the product versus your higher end or affluent customer? And I would imagine that there’s a duel strategy here looking at opening price points and value versus what you described earlier as your ongoing designer program. You know, it seems that the trade down with that more affluent customer would start happening at some point or should have started happening. Just wondering how you view that and your ability to go out and actually take more share, more than you share of that marketplace given the weakness in the department stores sector.

You know, Jeff, I think that our discretionary side appeals to all levels of affluence. You know we have designers spread now across many different product categories throughout the store at many different price point levels. And so I think there potentially could be some trade down from higher end into Target but I also think that the value equation is very recognizable to our core guests. And it gives them a reason to want to buy and they recognize the value. So I think it really pertains across the affluence.

Do you feel right now that you’re allocation across price points is appropriate for the given cycles, in both apparel and home? Or where are you on that continuum of resetting it for the cycle?

I do think it’s appropriate. It’s something that we are continually evaluating and adjusting. So you will always see that moving slightly to make sure that we have the right price points and the right percent within each category. We’re in the process of really evaluating all of our product categories and editing SKUs. We want to make sure that the value that we do have we clearly communicate to our guests in a well organized way that helps them really weigh, find and grab their attention. And so I think we will continue to adjust. You’ll see SKUs go down slightly in the coming year, as you did last year. But I think we’re pretty well positioned.

In terms of sourcing, your expectations for 2009 in terms of sourcing, inflation, deflation or impact on the gross margins year-over-year?

I think it’s a little early to tell at this point what’s going to happen in ’09 with pricing. As always we will continue to negotiate vigorously with our suppliers to make sure that we’re getting great prices on all of our products and adjusting our retails accordingly as we go forward to make sure that we’re competitive. But hard to predict at this point.

I would say that in total we’ve seen some stability and maybe some price softening in certain categories. Clearly the environment that we were in last year where we had inflationary pressures broadly across the store has for the most part abated. And while we haven’t seen significant reductions we’re not really seeing any increases. And in some cases we’re seeing some reductions. So we think that bodes well for the future, but as Kathy said we still haven’t seen enough indication that prices are moving down in a wholesale basis.

Your next question comes from Robert Drbul - Barclays Capital.

Doug, can you give us an update on the – I guess in October you gave us a couple of sensitivity analyses and the one that is most intriguing now is the 200 basis point increase in the charge-off rate to $0.15 of EPS. And I guess my question is around the thoughts then versus what you just did with the bad debt provision, does that sort of still hold for you guys? And maybe could you give us an update in terms of how you see this playing out in ’09?

Be happy to. Compared to 90 days ago, our write-offs in the fourth quarter in dollars were in line with our expectations. What happened and you can almost trace this even though our guests don’t live on Wall Street you can almost trace to the weekend, the weekend that Lehman failed and the Merrill Lynch-Bank of America transaction was announced. Sharp increases in risks leading to a clear projected increase in write-offs in the front half of 2009 from our receivables base that existed at year-end. And so even though the write-offs weren’t worse in the quarter than we expected, the risks clearly gathered steam and caused us to carefully assess the proper reserve to carry at year-end. Looking forward into 2009 I think our write-offs are likely to stabilize. Q1, Q2 each in the range of about $300 million. One of the reasons that I’m speaking in dollars as opposed to rates is that you’re beginning to see the turn in the portfolio from growth to what will likely evolve into declines in gross receivables. And so I think it’s a crisper language to talk about the dollars of write-offs as opposed to having the variability due to the denominator effect, speaking of rate terms. But nonetheless, not trying to candy coat this, in rate terms that is obviously a meaningful increase from today’s rates. Yet I believe that those rates will clearly stabilize. We’re already seeing signs of stabilization in early stage delinquencies. And that, depending on how that evolves from here, could end up having a beneficial impact in the back half of the year. It’s a bit premature to predict just how much or just what the timing would be. But I feel very good that our year-end reserve should accommodate the levels of anticipated write-offs in the front half of the year and therefore I feel very good about the prospects of returning to modest profitability in this segment in each of the next two quarters and beyond.

And then the other question that I have is when you look at the relationship with Chase on the credit business are you close to a point where, you know, at what level do they get more assertive with control? And you talked about something like that when you initiated this relationship. Are we far from that or is that a concern at this point?

When we organized that transaction as you know essentially provided the portfolio with sufficiently profitable on a form of cash accounting basis, our partner earns a full caps return and we earn all of the excess to the extent that there is any. Throughout 2008 and specifically throughout the fourth quarter that return has been fully earned by J.P. Morgan-Chase and we have continued to enjoy on a cash accounting basis those excess returns. In contrast, on an accrual accounting basis we just reported a segment pretax loss for the quarter, but that is disconnected from a timing standpoint and quite substantially from the accounting with J.P. Morgan-Chase. More broadly on the relationship, we are in a sharing mode where it’s in their best interest and in our best interest, classic mutual alignment, to insure that our risk management techniques, our new account underwriting standards and our existing account line management practices, and especially our existing account delinquent collection practices – it’s in our mutual best interest to insure that we are as finely tuned in that equation as we could possibly be. And I remain quite delighted with the progress of that relationship.

Your next question comes from Adrianne Shapira - Goldman Sachs.

My question is related to the deceleration of square footage growth. I mean, the five to 30 that you had alluded to in terms of fall of ’09 and 2010 clearly your response to the current environment. But help us think about is that perhaps a new run rate? How should we be thinking about store openings going forward?

Well, it wasn’t just an allusion. I specifically said that our range of new store openings in 2010 could be as low as about five stores, could be as high as about 30 stores. Very unlikely to be outside that range by any meaningful amount. I think it all depends on how soon and to what extent we are able to return to a profit formula that makes it a very interesting proposition to invest more aggressively in new store openings. So it’s entirely possible in 2011 that we could open 60, 70, 80 stores. Entirely possible that we could open five stores. It depends on where this economy goes.

And then just following on that, perhaps update on the CapEx, 2009 CapEx assumptions and what a five store opening in 2010 or a 30 store opening in 2010 would drive – what sort of CapEx level that would imply.

To reiterate our base plan is to invest a little over $2 billion in 2009 and in the invent that we hit the high end of the 2010 store opening forecast, our 2009 CapEx could range up to $2.5 billion. But at the moment we are operating at the lower end of that, not the higher end of that range.

And then just, Doug, you had mentioned first half EBIT lower in first half of ’09 with declines comparable to what we saw in the fourth quarter. I know you’re not giving explicit ’09 guidance but in the past you’ve commented on your comfort level with consensus. Perhaps you could share that with us today, that it’s the current consensus of 256? Your thoughts on that?

Well, clearly on the front half of 2009 the consensus is higher than the description that we’ve laid out for our business. In the back half of 2009 it’s a little less clear. Obviously we would not expect by the time the fourth quarter rolls around to either repeat the two big drivers on the down side of the performance in the quarter just ended. We certainly do not expect to repeat the markdown experience of Q4 ’08 and I certainly do not expect to repeat the credit segment loss. So I think looking forward we have a couple of very challenging quarters. Last year’s performance, Q1, Q2 relative to what we saw in the back half of the year looks like the good old days. It didn’t feel that way at the time, but cycling against it, it certainly feels that way. Looking into the back half to the extent that we are able to grow earnings in any quarter, certainly Q4 looks like the one to count on.

Your next question comes from Daniel Binder - Jefferies & Co. Daniel Binder - Jefferies & Co.: You mentioned that you were seeing some encouraging early stage measures of risk, and I think you cited specifically the early stage delinquencies. Is that what you’re seeing in February? Because I guess looking at the two month delinquencies in the January file they look like they were still moving higher. And then secondly, with regards to your comment about not anticipating a need for additional meaningful reserves, were you referring specifically to meaningful reserves in excess of write-offs or meaningful reserves period?

Well, on the first question of course our monthly securitization filings are filed in the month following the activity. And so the filing just made was with respect to January activity and in January delinquencies were still sequentially on the move. And you’ll see delinquencies on the move in February as well. It’s the early stage that is showing signs of - more than showing signs, it is stabilizing and improving. And so you’ll see that stabilize in the first layers of reported delinquencies in our February, March, April filings filed March, April, May. Again there’s a lag effect in when you see that. Separately with respect to my reserve comment we just added hugely to the reserve in excess of write-offs in Q4. What I intended to convey was the in Q1 I would expect that our expense running through the P&L will roughly approximate the $300 million in write-offs that we expect to report during the quarter. Therefore I do not expect the reserve to change much, plus or minus, in Q1. Daniel Binder - Jefferies & Co.: And then with regard to and I realize it may be difficult to predict for the full year, but your intentions in terms of receivables growth roughly for the full year, do you think it will be roughly in line with sales or below sales growth?

No, I tried to convey earlier in my remarks that we very specifically expect receivables to decline in 2009. We have taken some very tough love steps with this portfolio and that has significantly curtailed the year-over-year growth, sequentially as we moved throughout 2008 you’re going to see the portfolio give or take in line with prior year levels in Q1 ’09. And it is highly likely that Q2, Q3, Q4 ’09 we will have a lower amount of gross receivables on the books than we had Q2, Q3, Q4 ’08 with the gap likely widening as the year progresses. Daniel Binder - Jefferies & Co.: So should we be thinking sort of sales rate less, what, 500 basis points? Is that a good starting point?

I think that the dynamic is a lot more driven by factors other than sales. The dynamic in this portfolio is a lot more driven by the significant decline in charge activity relative to receivables, offset to an extent by a more modest change in rates of payment. But to try to put a gauge on that certainly by the end of the year you could see this portfolio year-over-year decline in the $0.5 billion to $1 billion range in gross receivables. We’ll be able to provide more clarity on that obviously as the year progresses, but from today’s vantage point that would be the likely range of gross receivables balances year-end ’09 versus year-end ’08, down $500 million to $1 billion. Daniel Binder - Jefferies & Co.: And then finally if things play out as you expect or hope in the first half for the year on credit would you expect that in the back half you could see reserves below write-offs?

Certainly that will occur at some point in the future. It could occur as early as the back half of 2009. I think it’s a bit premature to lay that out as a forecast.

Your next question comes from Gregory Melich - Morgan Stanley.

I have two questions. One is if you think about the SG&A dollars, Doug you’ve done a great job on that, but it sounds like it’s going to grow a bit this year. How should we think about that? Is it still going to grow less than square footage growth or is there something else in there we need to be watching? Then a follow-up on the comps.

Well, I think that SG&A is likely to grow at or slightly above square footage growth but not by a country mile. The tendency will be to grow faster than square footage not slower.

And what changes this year that drives that? Is there inflationary costs or?

Well, we obviously have inflation every year and a lot of costs. This year we’ve done a great job overwhelming those inflationary pressures. A couple of things unique to 2008 that were beneficial to SG&A in ’08 that are not likely or at least hopefully in one case won’t recur. Clearly there was a shortfall is the kind word to use here in incentive compensation. We have a set of pay for performance plans and the performance wasn’t there and therefore we didn’t accrue the pay. I would hope that 2009, speaking as a participant and a shareholder, generates a P&L with more incentive pay in it. Separately, we did enjoy the benefits in 2008 of some favorability in older layers of our workers compensation accruals that could recur in 2009 but that’s actually created a bit of a benefit in each of the last two years. Was not a big issue year-over-year, ’08 versus ’07, but I would not expect that one to recur in ’09 as well. In between the two of those that will clearly put some pressure on SG&A assuming performance is there. Otherwise only the workers compensation issue will flow through.

And then on – you talked about mid single digit negative comps on the first half. Kathy and Gregg, could you put that into context? Is that what you’re planning to buy for and should we assume that the mix is the same where food and consumables are still maybe up a little bit but everything else is down 8 to 10%? Or what are you planning for in a buy I guess is the question?

Yes, I would describe the negative mid single digit comp decrease with a very wide range of outcomes in our various business units. In our food and healthcare businesses, they continue to perform very, very well and that change would be in the upper mid single digit comps and in some cases in the upper double digit comp range. On the highly discretionary side in home and apparel and maybe in some cases our lawn and patio business we’re looking at mid double digit comp decreases. So the range of businesses would fall in between those kinds of parameters. And that’s how we have purchased for the spring season. We are very conservative in apparel, home and seasonal categories where there is significant markdown risk. And so those businesses are on average high single digit or low double digit comp decreases. And the majority of our non-discretionary categories are very short cycle, so we can get back into those very, very quickly. And there’s no reason for us not to plan that business other than optimistically because we want to be in stock 100% of the time and not miss a sale in food, commodities, and health and beauty. And that’s pretty much how we’re planning it.

Your next question comes from Uta Werner - Sanford Bernstein.

I wanted to follow-up on a question related to the J.P. Morgan relationship. And as far as I recall there was the formal trigger point at which they would get less interest and would formally have the rights to kind of help with the management of the credit card. Could we just see how far we actually are? I know we kind of get closer near the end on this but I wonder if we can get a little bit closer on specifying how far away we are from that trigger point. And the second question I get asked by clients a lot which is if the J.P. Morgan relationship could be interpreted as a non-recourse debt financing, would you consider walking away from the receivables and the debt? And if not, why not?

Well, I think the answer to the second question lies in the answer to the first question. This portfolio on a cash basis is returning hundreds of basis points higher than the point at which J.P. Morgan-Chase’s return is capped. You may recall that there are a couple of levels of performance above that at which at a first layer there are some pre-authorized accounts underwriting and in risk management controls that are triggered. And at a level in between that first trigger and the point at which their caps return is no longer earned, a degree of control changes hands in terms of risk management underwriting. But we’re not near either or any of those. We are hundreds of basis points higher than the point at which J.P. Morgan and Target would no longer earn pro rata of the caps return defined in the transaction. And therefore it’s at the moment a rather moot point as to what might happen if some disaster that’s not even close were to occur.

I wonder if you could comment a little bit on the IT investment that you mentioned earlier in your remarks.

You have to be a bit more specific about IT investment.

I think you mentioned three areas in which you were investing. One was pharmacy, one was compliance and I didn’t catch the third.

Those were actually Gregg’s comments so I’ll have Gregg clarify.

Pharmacy, compliance, food. We’re also looking at our entire infrastructure from a financial and a unit basis, and are in the beginning stages of an entire transformation of both of those systems. And so we have some very important strategic IT initiatives that are underway and we remain committed to those.

Anything in particular that you can share with us or do we need to keep it at that?

Well, I think that’s sufficient for today. If you want more detail on that, Doug or Susan or John will be available to give you whatever level of detail you’d be interested in going through on any one of those IT projects.

And finally I wonder if you can comment on the online performance. Thank you.

Yes, the online performance was difficult for us in the fourth quarter. We had been experiencing very strong double digit increases and just like the retail side of the business, when the world turned in September, October we saw a pretty precipitous decline on the online business as well. That has somewhat strengthened as we’ve got into 2009 so we’re expecting modest growth in that business right now and clearly not as fast of growth as what we anticipated six or nine months ago, but better than it was in the early stages of fourth quarter. We have time for one more question.

Your last question comes from Joe Feldman - Telsey Advisory.

Quick question on the credit, is there a certain spread that you try to maintain between the allowance for bad debt from the credit plus the charge-off rate? Because it seems like this past quarter and I understand what you’d said, Doug, about the why you had accelerated the increase, but it just seems a bit more disproportionate to what the charge-off rate has been trending as of the past few months.

That is not going to be a stable relationship quarter-by-quarter because we carefully manage the assessments of the risks inherent in the portfolio in every quarter, and diligently try to estimate the future write-offs of the current receivables. And at quarter-end that happened to be just over $1 billion. Our future estimate of write-offs of the existing $9 billion plus in receivables is a little in excess of $1 billion. That is separated from a forecast of future write-offs because there will be some write-offs in ’09 of receivables that haven’t yet been created. We’ll write-off some receivables in the back half of ’09 based on loans made in the front half of ’09, so of course it would be inappropriate to have that kind of allowance on our books at this point. Net net, the allowance that we have at the end of the year would correspond to a write-off rate, all else being equal, somewhere in the low to mid teens during 2009.

That concludes Target’s fourth quarter and year-end earnings conference call. Thank you all for your participation.

Thank you for joining Target Corporation’s fourth quarter 2008 earnings release conference call. You may now disconnect.