Continued market share growth supports plan for approximately 140 new stores in fiscal 2009
MINNEAPOLIS--(BUSINESS WIRE)--Feb. 15, 2008--Based on
lower-than-expected revenue growth in fiscal January coupled with its
near-term outlook, Best Buy Co., Inc. (NYSE: BBY) reported today that
it now expects its fiscal 2008 earnings per diluted share to be $3.05
to $3.10 for the fiscal year which concludes on March 1, 2008, an
approximately 10-percent increase compared with its EPS of $2.79 for
the prior year. The company previously had provided earnings guidance
of $3.10 to $3.20 per share for fiscal 2008.
"Our December revenue results were in line with our expectations.
Soft domestic customer traffic in January, coupled with our near-term
outlook, now indicate that our fourth-quarter revenue will fall short
of our planned targets," said Brad Anderson, vice chairman and chief
executive officer of Best Buy.
The company, which reported a comparable store sales gain of 1.5
percent for fiscal December, now expects comparable store sales to
decline modestly for the fiscal fourth quarter, reflecting changes in
the macro environment. As a result, the company is projecting nearly
$40 billion in revenue for fiscal 2008, including an annual comparable
store sales gain of 2.5 percent to 3 percent, compared with previous
guidance of approximately 4 percent.
The company now anticipates lower revenue for the fiscal fourth
quarter in categories such as home theater, MP3 devices, digital
imaging and video gaming (which experienced industry-wide temporary
inventory shortages in the United States during January), compared
with its prior expectations. These volume reductions are expected to
be partially offset by higher-than-expected volumes from notebook
computers, which are benefiting from an expanded assortment and
continued customer interest in mobile computing.
"The macro-economic environment grew more challenging after the
holidays," said Jim Muehlbauer, enterprise CFO (interim). "Our
post-holiday results are not going to be what we originally expected.
Yet our strategic results are favorable; our most recent data shows
that customer satisfaction improved, and we built market share in key
categories such as home theater, computing and gaming."
Muehlbauer added, "Our optimism and our point of view about the
future has not changed, and we continue to operate our business with a
long-term perspective. That perspective guides our decision to
continue expanding our footprint globally with new stores.
Furthermore, we anticipate returns on our new store investments to be
similar to what we've seen historically."
Best Buy Continues to Focus on Growth Opportunities
The company said that it plans to open approximately 130 to 160
new stores globally during its 2009 fiscal year in order to increase
customer convenience and to boost market share while providing the
latest elements in store design. The company said it expects its total
retail square footage to grow 10 percent to approximately 51 million
square feet by the end of fiscal 2009.
"The challenges we're solving for consumers in this fascinating
industry have never been larger, and we believe we have the solution
for them in our people," Anderson said. "Our confidence in our
employees has never been stronger. We're consciously choosing not to
pull back on our investments, even in a difficult economy, because we
are making the bet that the opportunities are rich, over the longer
term. When the U.S. economy regains its momentum, we believe that our
results will show these to be good investments."
The company's growth plans also include operational enhancements
and expansions into new categories or businesses where consumers have
shown interest.
"We are extending our Best Buy Mobile experience, through our
partnership with The Carphone Warehouse Group, to the majority of our
U.S. Best Buy stores over the next 18 months. We want more customers
to enjoy improved service and selection in mobile phones," said Brian
Dunn, president and chief operating officer. "We have achieved number
one retail market share in the consumer laptop market with the best
assortment and employees in the industry. Collaborative relationships
with all of our vendors--including HP and Toshiba--have helped us
dramatically improve our computing customer experience, resulting in
share increases and continued growth. We'll add to that strength in
fiscal 2009 as we expect to operate 600 stores with Apple computer
products and services as well as continuing our relationship with
Dell. We'll also reset the GPS area to maximize the customer
experience. Last, to continue to foster customer loyalty, we intend to
enhance our Reward Zone program benefits for our best customers, add
gaming and music experiences in the center of our stores, enhance our
Web sites and test several new categories."
Dunn added, "Our employees' expertise and their commitment to
serving our customers is ultimately why we feel so confident in our
growth opportunities, including expanding our footprint. Our market
leadership allows us to invest in new areas, domestically and
internationally, which we believe will help us continue to build on
our long track record of growth."
Company Intends to Operate More Than 1,000 U.S. Best Buy Stores in
Fiscal 2009
In fiscal 2009, the company expects to open 85 to 100 new Best Buy
stores in the United States. Best Buy estimates that approximately 75
percent of these new stores will be in the 30,000-square-foot format.
It also anticipates 20 percent of the new stores will be in the
45,000-square-foot format with the balance in the 20,000-square-foot
format. The majority of the new stores are projected to be opened in
markets where Best Buy already has an established presence. In
addition, the company expects to relocate four U.S. Best Buy stores
during fiscal 2009. The majority of the new U.S. stores are scheduled
to open periodically throughout the company's first three fiscal
quarters so that the new stores are open in time for the holiday
shopping season.
Dunn said, "We are focused on driving the greatest amount of
shareholder value over the long term. We are proud that our plans have
us crossing the 1,000-store mark in fiscal 2009 and believe the
opening of new stores continues to be a great investment."
He concluded, "We believe that the economic environment will
remain challenging in the near term. Historically, times like these
have created the best opportunities to distance ourselves from the
competition. Accordingly, we plan to move faster in those areas where
we can provide a differentiated experience to customers and deliver
long-term value for our shareholders."
The company also commented that it plans to open five to 10
additional Pacific Sales Kitchen and Bath Centers over the coming
fiscal year. The stores, opening in western states, will offer
convenient locations for customers and career opportunities for
employees. The company currently operates 17 Pacific Sales stores,
which have an average of approximately 30,000 square feet.
In total, Best Buy estimates that its U.S. retail square footage
will increase to approximately 40 million square feet by the end of
fiscal 2009, compared with approximately 37 million square feet
projected for the end of fiscal 2008.
Best Buy Plans to Expand International Retail Square Footage at
Least 12% Next Year
Best Buy's fiscal 2009 plan includes the addition of approximately
40 to 50 new stores in its international segment in order to reach
more consumers in fast-growing markets with its differentiated
customer experience.
The company anticipates opening approximately 12 new stores in
Canada, including approximately six Future Shop stores and six Best
Buy stores. The new Future Shop stores will open at intervals
throughout fiscal 2009, and the Best Buy stores are scheduled to open
in the middle of the fiscal year. The company also plans to close one
Future Shop store and relocate six Future Shop stores in the coming
fiscal year.
In China, the company plans to add approximately 20 to 25 new Five
Star stores throughout fiscal 2009. Additionally, the company expects
to open five to eight additional Best Buy locations in China, based on
consumers' response to its first location in Shanghai. As previously
reported, Best Buy plans to open two to five new stores in Mexico in
the second half of fiscal 2009. The company now projects that it will
open its first one or two stores in Turkey in the early part of fiscal
2010. The international segment's retail square footage is expected to
increase to approximately 11 million square feet by the end of fiscal
2009, representing nearly 22 percent of the company's total retail
square footage.
"The international team has made great progress in Canada and
China as well as with our partnership with The Carphone Warehouse
Group. We intend to draw on all of those experiences as we enter
Mexico and Turkey," said Bob Willett, CEO of Best Buy International
and enterprise CIO. "In the coming year, we will put more focus on the
opening of stores in new countries where we see unmet customer needs.
Our entrances into Mexico and Turkey, which will require up-front
investment, are a critical part of our long-term journey and are
inspired by the same strategy that drives our domestic growth."
Best Buy's New Stores to Create 12,000 Retail Jobs
Best Buy's fiscal 2009 store expansion plans are expected to bring
more than 12,000 new retail management, sales and services positions
to communities in its markets. The leading retailer, which annually
gives 1.5 percent of its pre-tax profits to charitable organizations,
expects to employ more than 150,000 people worldwide by the end of
fiscal 2009.
Dunn said, "The relationships between our employees and our
customers are the foundation for our growth. Combining the resources
of a $40 billion enterprise with the unique local insights from our
employees across the globe is both our challenge, and our opportunity.
By focusing on our customers, we believe we can achieve even greater
heights."
Best Buy's financial results, store counts and other news releases
can be found on the Internet at the company's Web site,
www.BestBuy.com, by clicking on the "For Our Investors" link. They
also can be accessed via Business Wire's Web site at
www.businesswire.com.
On April 2, 2008, the company expects to report fiscal
fourth-quarter results, along with more details about its expectations
for fiscal 2009.
Store Count and Fiscal 2009 Expansion Summary(1)
Store Count Net New Stores
Location/Brand FY08E FY09E Low-End FY09E High-End
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U.S./Best Buy 917 85 100
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U.S./Pacific Sales 17 5 10
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U.S./Magnolia Audio Video 13 - -
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U.S./Geek Squad Standalone 7 - -
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Domestic 954 90 110
------------------------------========================================
Canada/Future Shop 131 5 5
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Canada/Best Buy 51 6 6
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China/Five Star 159 20 25
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China/Best Buy 1 5 8
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Mexico/Best Buy - 2 5
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International 342 38 49
------------------------------========================================
1,296 128 159
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(1) All figures estimated at period end
Forward-Looking and Cautionary Statements:
This news release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 as
contained in Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934 that reflect management's
current views and estimates regarding future market conditions,
company performance and financial results, business prospects, new
strategies, the competitive environment and other events. You can
identify these statements by the fact that they use words such as
"anticipate," "believe," "estimate," "expect," "intend," "project,"
"plan," "outlook," and other words and terms of similar meaning. These
statements involve a number of risks and uncertainties that could
cause actual results to differ materially from the potential results
discussed in the forward-looking statements. Among the factors that
could cause actual results and outcomes to differ materially from
those contained in such forward-looking statements are the following:
general economic conditions, acquisitions and development of new
businesses, divestitures, product availability, sales volumes, pricing
actions and promotional activities of competitors, profit margins,
weather, changes in law or regulations, foreign currency fluctuation,
availability of suitable real estate locations, the company's ability
to react to a disaster recovery situation, and the impact of labor
markets and new product introductions on overall profitability. A
further list and description of these risks, uncertainties and other
matters can be found in the company's annual report and other reports
filed from time to time with the Securities and Exchange Commission,
including, but not limited to, Best Buy's Annual Report on Form 10-K
filed with the SEC on May 2, 2007. Best Buy cautions that the
foregoing list of important factors is not complete and assumes no
obligation to update any forward-looking statement that it may make.
About Best Buy Co., Inc.
Best Buy Co., Inc. (NYSE:BBY) operates a global portfolio of
brands with a commitment to growth and innovation. Our employees
strive to provide customers around the world with superior experiences
by responding to their unique needs and aspirations. We sell consumer
electronics, home-office products, entertainment software, appliances
and related services through nearly 1,300 retail stores across the
United States, throughout Canada and in China. Our multi-channel
operations include: Best Buy (BestBuy.com, BestBuy.ca and
BestBuy.com.cn), Future Shop (FutureShop.ca), Geek Squad
(GeekSquad.com and GeekSquad.ca), Pacific Sales Kitchen and Bath
Centers (PacificSales.com), Magnolia Audio Video (Magnoliaav.com),
Jiangsu Five Star Appliance Co. (Five-Star.cn) and Speakeasy
(Speakeasy.net). Best Buy supports the communities in which its
employees work and live through volunteerism and grants that benefit
children and education.
CONTACT: Best Buy Co., Inc.
Media Contact:
Susan Busch, 612-291-6114
Director of Corporate PR
susan.busch@bestbuy.com
or
Kelly Groehler, 612-291-6115
Sr. Manager of Corporate PR
kelly.groehler@bestbuy.com
or
Investor Contacts:
Jennifer Driscoll, 612-291-6110
Vice President of Investor Relations
jennifer.driscoll@bestbuy.com
or
Charles Marentette, 612-291-6184
Senior Director of Investor Relations
charles.marentette@bestbuy.com
or
Carla Haugen, 612-291-6146
Director of Investor Relations
carla.haugen@bestbuy.com
SOURCE: Best Buy Co., Inc.