Company Reports 3.7% Comparable Store Sales Gain
MINNEAPOLIS--(BUSINESS WIRE)--June 17, 2008--Best Buy Co., Inc.
(NYSE: BBY):
First-Quarter Performance Summary
(U.S. dollars in millions, except per share amounts)
Three Months Ended
May 31, 2008 June 2, 2007
----------------------------------------------------------------------
Revenue $8,990 $7,927
----------------------------------------------------------------------
Comparable store sales % gain(1) 3.7% 3.0%
----------------------------------------------------------------------
Gross profit as % of revenue 23.7% 23.9%
----------------------------------------------------------------------
SG&A as % of revenue 20.6% 20.5%
----------------------------------------------------------------------
Operating income $ 277 $ 266
----------------------------------------------------------------------
Operating income as % of revenue 3.1% 3.4%
----------------------------------------------------------------------
Net earnings $ 179 $ 192
----------------------------------------------------------------------
Diluted EPS $ 0.43 $ 0.39
----------------------------------------------------------------------
(1) Comprised of revenue at stores, call centers and Web sites
operating for at least 14 full months, as well as remodeled and
expanded locations. Relocated stores are excluded from the comparable
store sales calculation until at least 14 full months after reopening.
Acquired stores are included in the comparable store sales calculation
beginning with the first full quarter following the first anniversary
of the date of the acquisition. The calculation of the comparable
store sales percentage change excludes the effect of fluctuations in
foreign currency exchange rates. The method of calculating comparable
store sales varies across the retail industry. As a result, Best Buy's
method of calculating comparable store sales may not be the same as
other retailers' methods.
Best Buy Co., Inc. (NYSE: BBY) today reported net earnings of $179
million, or $0.43 per diluted share, for its fiscal first quarter
ended on May 31, 2008. The leading U.S. and Canada consumer
electronics retailer's diluted earnings per share increased 10
percent, compared with $0.39 per diluted share, or $192 million, for
the prior-year first quarter. The mean analyst estimate for the fiscal
2009 first quarter was $0.37 per share.
The operating income growth was driven by solid revenue growth
through new store openings and a comparable store sales increase of
3.7 percent. These factors were partially offset by a 20-basis-point
decline in the gross profit rate and a 10-basis-point increase in the
SG&A rate. The company's diluted EPS benefited from a lower weighted
average diluted share count (driven by the share repurchase activities
in the prior fiscal year) as well as the operating income gain, which
was partially offset by a reduction in investment income.
First-Quarter Highlights
- Total quarterly revenue increased 13 percent to $9.0 billion,
driven by new store openings, a comparable store sales gain of
3.7 percent and foreign currency exchange fluctuations. Total
online revenue grew 30 percent for the quarter as consumers
responded to new online features, such as improved navigation
and the addition of customer reviews and ratings.
- Domestic revenue grew 11 percent, reflecting the net addition
of 106 new stores in the past 12 months as well as a
comparable store sales gain of 3.5 percent. International
revenue grew 26 percent, aided by favorable fluctuations in
foreign currency exchange rates, the net addition of 39 new
stores in the past 12 months and a comparable store sales gain
of 4.7 percent.
- The company estimated that its domestic market share increased
by approximately 1.5 percentage points compared with the prior
year's period, with the gains showing up in key categories
such as TVs, computing, video gaming and mobile phones. The
gain was led by the home office category, aided by the
expansion of Apple computing products to nearly 500 U.S. Best
Buy stores and the addition of Dell computers into the
assortment at all U.S. Best Buy stores starting last December,
on top of carrying all of the other major brands.
- The company added more than 3 million members to its loyalty
program in the United States during the first quarter of
fiscal 2009, finishing the first quarter with more than 29
million Reward Zone members.
- The company operated 599 Best Buy Mobile locations within its
U.S. Best Buy stores at quarter end. On a year-over-year
basis, these locations continued to enjoy strong double-digit
gains in the number of wireless connections (including
cellular phones and wireless broadband cards), driving a
strong double-digit comparable store sales gain for the
wireless category. The company expects to convert all U.S.
Best Buy locations by the end of calendar 2008. Due to the
strong results driven by the Best Buy Mobile employees coupled
with the expertise of The Carphone Warehouse Group PLC, the
company has now, subsequent to the end of the quarter, decided
to extend its relationship with CPW under the existing
agreement to include similar experiences in Canada, China,
Mexico and Turkey. Providing leadership for this international
expansion of Best Buy Mobile will be Charles Dunstone, CEO of
CPW.
- Best Buy announced its plans to start a new venture in Europe,
in a new phase of its relationship with CPW. The new venture
will primarily consist of CPW's mobile services and retail
distribution businesses, which includes more than 2,400
European stores; as well as CPW's share of Best Buy Mobile in
the United States and Geek Squad operations in the United
Kingdom and Spain. Best Buy agreed to pay CPW GBP 1.1 billion,
or approximately $2.1 billion, in cash for a 50-percent stake
in the new venture. The company expects the transaction to
close on June 30, 2008, subject to customary approvals.
"We believe that we can grow our business faster than the
competition by understanding the needs of customers near each store,
regularly testing new ways to serve those unique customers, and doing
a better job of engaging our employees' talents to help us do that,"
said Brad Anderson, vice chairman and CEO of Best Buy. "The feedback
we're getting from our general managers is that our growth in the
first quarter came in part from having a common goal of growing
locally, combined with a clear picture for how each employee can write
himself or herself into the story."
First-Quarter Results Show Better-Than-Expected Revenue Growth
For the fiscal 2008 first quarter, Best Buy's revenue increased 13
percent to $9.0 billion, compared with revenue of $7.9 billion for the
first quarter of fiscal 2008. The revenue increase reflected the net
addition of 145 new stores in the past 12 months, a comparable store
sales gain of 3.7 percent and the favorable impact of foreign currency
fluctuations. The comparable store sales gain accelerated in the
second half of the quarter and remains solid thus far in early fiscal
June. The comparable store sales gain for the quarter was driven by an
increase in the average selling price, as the company's revenue mix
continued to reflect a shift toward higher-ticket items, such as
flat-panel TVs, video gaming consoles, notebook computers and GPS
devices.
The gross profit rate for the fiscal first quarter was 23.7
percent of revenue, which declined 20 basis points from the
prior-year's fiscal first-quarter rate, due to the mix of the revenue
growth. Stronger-than-anticipated revenue from lower-margin items such
as notebook computers and video game consoles contributed to the
decline. Partially offsetting these decreases was the positive impact
of increased sales in mobile phones as well as a year-over-year
improvement in promotional effectiveness--particularly in televisions,
inclusive of taking into account the increased use of financing offers
as a customer value proposition.
Best Buy's SG&A expense rate increased to 20.6 percent of revenue
for the fiscal first quarter, compared with 20.5 percent of revenue
for the prior year's fiscal first quarter. The year-over-year increase
was better than expected as solid revenue growth largely offset
planned investments for future growth. As expected, the company
invested in its IT capabilities, the launch and operation of Best Buy
Mobile store-within-a-store locations and international investments,
such as IT infrastructure, customer research capabilities and start-up
costs associated with launching and preparing to launch new stores in
China, Mexico and Turkey.
The company reported investment and other income of $21 million,
compared with $44 million in the prior year's fiscal first quarter.
The reduction in investment and other income reflected the impact of
lower average cash and investment balances due to the company's $3.5
billion of share repurchases in fiscal 2008.
"We are incredibly encouraged by our employees' continued energy
and appetite for growth around the globe," said Brian Dunn, president
and chief operating officer of Best Buy. "We are very clear on our
growth goals--particularly at the store level, where we are getting
outstanding traction on locally driven growth ideas. We have an
amazing opportunity to pair the power of our scale with our local
insights which are closest to the customer--and we see many indicators
that our growth propositions are working."
Company Reiterates Annual EPS of $3.25 to $3.40 for Fiscal 2009,
Excluding New Venture
Jim Muehlbauer, Best Buy's executive vice president of finance and
CFO, said, "We are off to a solid start and remain on track to deliver
$3.25 to $3.40 of diluted EPS for the year. The ability of our
employees to deliver strong top-line and positive operating income
results in a challenging environment reflects their focus on the
customer and underscores our belief in their ability to grow the
company."
The company continues to expect $43 billion to $44 billion in
revenue for the fiscal year, assuming a comparable store sales gain
for the year of 1 percent to 3 percent. Also, as previously reported,
Best Buy does not plan to repurchase any of its shares in fiscal 2009.
Best Buy's current earnings guidance excludes the impact of its
new venture with CPW, which remains subject to customary approvals.
The company currently anticipates closing the transaction by June 30,
2008. The company also currently expects to report the results of the
new venture on a two-month lag, similar to the reporting lag in China.
As a result of the company's current decision to report the operating
performance of the new venture on a two-month lag (whereas the
financing costs related to the transaction will commence on the
transaction closing date), the company now expects the CPW
transaction's net accretion to be modestly below the previously
announced range of $0.05 to $0.07 per diluted share for fiscal 2009.
"It is very early in what we still expect to be a volatile year
for the consumer. While the challenges in the external environment
will continue to make consumer spending difficult to predict, we are
very encouraged by the local growth plans we've developed to serve our
customers both today and into the future," added Muehlbauer.
Quality of Execution Drives Revenue Growth
Domestic Performance Summary
(U.S. dollars in millions)
Three Months Ended
May 31, 2008 June 2, 2007
----------------------------------------------------------------------
Revenue $7,453 $6,704
----------------------------------------------------------------------
Comparable store sales % gain(1) 3.5% 1.7%
----------------------------------------------------------------------
Gross profit as % of revenue 24.4% 24.6%
----------------------------------------------------------------------
SG&A as % of revenue 20.7% 20.6%
----------------------------------------------------------------------
Operating income $ 277 $ 270
----------------------------------------------------------------------
Operating income as % of revenue 3.7% 4.0%
----------------------------------------------------------------------
(1)Comprised of revenue at stores, call centers and Web sites
operating for at least 14 full months, as well as remodeled and
expanded locations. Relocated stores are excluded from the comparable
store sales calculation until at least 14 full months after reopening.
Acquired stores are included in the comparable store sales calculation
beginning with the first full quarter following the first anniversary
of the date of the acquisition. The method of calculating comparable
store sales varies across the retail industry. As a result, Best Buy's
method of calculating comparable store sales may not be the same as
other retailers' methods.
Best Buy's domestic segment--comprised of U.S. Best Buy, Best Buy
Mobile, U.S. Geek Squad, Magnolia Audio Video, Pacific Sales and
Speakeasy operations--reported first-quarter operating income of $277
million, a increase of $7 million, compared with the prior year's
fiscal first quarter.
The domestic segment's fiscal first-quarter revenue totaled $7.5
billion, an increase of 11 percent over the prior year's first
quarter. The revenue increase was driven by the net addition of 106
new stores in the past 12 months and a comparable store sales gain of
3.5 percent.
The 30-basis-point decrease in the operating income rate reflected
a 20-basis-point decline in the gross profit rate and a 10-basis-point
increase in the SG&A rate. The reduction in the gross profit rate was
driven by a continued shift in the revenue mix to lower-margin video
game hardware and notebook computers, which was partially offset by
improvements due to mobile phones increasing in the revenue mix as
well as an improved gross profit rate within the home theater
category. The increase in the SG&A rate was better than expected as
solid revenue growth largely offset planned investment spending on the
Best Buy Mobile expansion and information technology projects designed
to enhance the company's point-of-sale systems and multi-channel
capabilities.
Domestic Category Summary
Revenue Mix Summary Comparable Store Sales
Three Months Ended Three Months Ended
May 31, June 2, May 31, June 2,
Revenue Category 2008 2007 2008 2007
----------------------------------------------------------------------
Consumer Electronics 39% 40% (0.6%) (0.4%)
----------------------------------------------------------------------
Home Office 31% 29% 9.3% 5.9%
----------------------------------------------------------------------
Entertainment Software 18% 18% 8.2% (0.8%)
----------------------------------------------------------------------
Appliances 6% 6% (10.6%) 2.0%
----------------------------------------------------------------------
Services 6% 6% 5.0% 7.3%
----------------------------------------------------------------------
Other less than 1% 1% n/a n/a
----------------------------------------------------------------------
Total 100% 100% 3.5% 1.7%
----------------------------------------------------------------------
During the first quarter of fiscal 2009, Best Buy's domestic
comparable store sales gain was driven by higher revenue from
flat-panel TVs, video gaming, notebook computers and mobile phones.
These gains more than offset comparable store sales declines in
projection and tube TVs, digital cameras, CDs and major appliances.
The home office revenue category led the domestic revenue growth
for the fiscal first quarter. The home office revenue category, which
accounted for 31 percent of fiscal first-quarter revenue, had a
9.3-percent comparable store sales gain. A double-digit comparable
store sales increase for notebook computers fueled the growth as
customers looked to expand the number of computers per household and
responded to Best Buy's industry-leading assortment. Mobile phones
experienced a strong double-digit comparable store sales gain, led by
the expansion of Best Buy Mobile, which offers an improved assortment
and customer service along with independent advice. These gains were
partially offset by comparable store sales declines in printers,
landline phones and computer networking products.
The entertainment software revenue category, which comprised 18
percent of first-quarter revenue, increased 8.2 percent on a
comparable store sales basis. A solid double-digit gain in comparable
store sales of video gaming was fueled by new software releases, as
well as strong sales of consoles, which offered better in-stock levels
and attractive pricing. These gains were partially offset by continued
comparable store sales declines for CDs and DVDs.
The services revenue category accounted for 6 percent of
first-quarter revenue. On a comparable store sales basis, the services
category increased 5.0 percent. A high single-digit gain in computer
services and a low double-digit gain in home theater services combined
with a mid single-digit increase in warranty comparable store sales to
drive the improvement. The company attributed the warranty increase,
which was a change in trend, to the increased volume of large-ticket
items, such as flat-panel TVs and notebook computers.
Consumer electronics, which represented 39 percent of
first-quarter revenue, posted a 0.6-percent comparable store sales
decline. Within consumer electronics, projection and tube televisions
experienced a strong double-digit comparable store sales decline as
consumers continued to opt for flat-panel technology. Digital imaging
also experienced a low double-digit comparable store sales decline as
household penetration of digital cameras increased. Offsetting these
declines were solid double-digit increases in flat-panel TVs and GPS
products. Flat-panel television growth was driven by compelling
customer solutions, new model availability and attractive financing
offers. The total television category posted a low double-digit
comparable store sales gain.
The appliances revenue category, which totaled 6 percent of fiscal
2009 first-quarter revenue, had a comparable store sales decline of
10.6 percent. This decrease was driven by a low double-digit decline
in major appliances amid a challenging industry-wide environment,
partially offset by an increase in average selling prices versus the
prior year. Despite negative industry trends, Best Buy estimates that
it is increasing its market share in appliances as customers chose
Best Buy's energy-efficient assortment and customer-focused labor
model.
The company estimated that its market share rose to a record high
in the first calendar quarter of the year.
Dunn said, "We had outstanding execution across our enterprise,
with all of our employees focused on delivering a great experience for
our customers. We believe we are growing our market share, and we
expect the insights we're gaining every day will simply open more
doors for growth in the future. When we combine motivated and engaged
employees with the resources of our entire enterprise, we can
accomplish amazing things. It's very rewarding when it all comes
together in a challenging environment like this one."
International Segment Delivers Solid Gross Profit Rate Improvement
International Performance Summary
(U.S. dollars in millions)
Three Months Ended
May 31, 2008 June 2, 2007
----------------------------------------------------------------------
Revenue $1,537 $1,223
----------------------------------------------------------------------
Comparable store sales % gain(1) 4.7% 12.8%
----------------------------------------------------------------------
Gross profit as % of revenue 20.3% 19.9%
----------------------------------------------------------------------
SG&A as % of revenue 20.3% 20.2%
----------------------------------------------------------------------
Operating income (loss) $ 0 ($4)
----------------------------------------------------------------------
Operating income (loss) as % of revenue 0.0% (0.3%)
----------------------------------------------------------------------
(1) Comprised of revenue at stores and Web sites operating for at
least 14 full months, as well as remodeled and expanded locations.
Relocated stores are excluded from the comparable store sales
calculation until at least 14 full months after reopening. Acquired
stores are included in the comparable store sales calculation
beginning with the first full quarter following the first anniversary
of the date of the acquisition. The calculation of the comparable
store sales percentage change excludes the effect of fluctuations in
foreign currency exchange rates. The method of calculating comparable
store sales varies across the retail industry. As a result, Best Buy's
method of calculating comparable store sales may not be the same as
other retailers' methods.
The company's international segment--comprised of Best Buy and
Geek Squad operations in Canada and China, Five Star operations in
China, and Future Shop operations in Canada--broke even in the first
quarter of fiscal 2009, an improvement compared with a loss of $4
million in the prior year's fiscal first quarter.
The international segment's fiscal first-quarter revenue rose 26
percent to $1.5 billion. The revenue increase was driven by
fluctuations in foreign currency exchange rates, the net addition of
39 new stores and a comparable store sales gain of 4.7 percent.
Consumers responded well to the company's offers, including the choice
of two unique brands in both Canada and China. In Canada, the
4.3-percent comparable store sales gain reflected strong consumer
interest in video gaming, flat-panel TVs, GPS devices and notebook
computers at both Future Shop and Best Buy stores. Revenue from retail
operations in China grew 32 percent to approximately $390 million for
the first quarter. China's revenue growth included the impact of new
store openings and a comparable store sales gain of 6.3 percent, which
was on top of strong growth in the prior year's period. (The company
reports results from its operations in China on a two-month lag.)
The 40-basis point improvement in the international gross profit
rate was driven largely by improved promotional management coupled
with lower financing costs, which were partially offset by negative
revenue mix in Canada, similar to the mix changes in the United
States. The SG&A rate rose by 10 basis points due to investment
spending for continued international growth, including investments in
information technology, customer analytics and new store start-up
expenses for China, Mexico, Turkey and Europe, which more than offset
the benefits of cost controls in Canada.
International Category Summary
Revenue Mix Summary Comparable Store Sales
Three Months Ended Three Months Ended
May 31, June 2, May 31, June 2,
Revenue Category 2008 2007 2008 2007
----------------------------------------------------------------------
Consumer Electronics 38% 39% (1.3%) 9.8%
----------------------------------------------------------------------
Home Office 30% 31% 2.9% 13.8%
----------------------------------------------------------------------
Entertainment
Software 12% 11% 23.1% 18.1%
----------------------------------------------------------------------
Appliances 15% 14% 13.0% 7.5%
----------------------------------------------------------------------
Services 5% 5% 3.6% 17.3%
----------------------------------------------------------------------
Other less than 1% less than 1% n/a n/a
----------------------------------------------------------------------
Total 100% 100% 4.7% 12.8%
----------------------------------------------------------------------
Entertainment software, which represented 12 percent of
first-quarter revenue for the international segment, posted a
23.1-percent comparable store sales gain. A solid double-digit
increase from video gaming and a high single-digit increase in DVDs
more than offset a decline in CDs. Appliances, representing 15 percent
of revenue, experienced a 13.0-percent comparable store sales
increase, driven by a low double-digit gain in China, which was
partially offset by a high single-digit decline in Canada. The home
office revenue category, which comprised 30 percent of first-quarter
revenue, experienced a 2.9-percent comparable store sales gain as
customers in Canada and China opted for the mobility of notebook
computers. Partially offsetting these gains was consumer electronics,
representing 38 percent of first-quarter revenue, which posted a
1.3-percent comparable store sales decline. A low double-digit
increase in flat-panel TVs and a triple-digit increase in GPS devices
were more than offset by a solid double-digit decline in tube TVs and
the exiting of the projection TV business in Canada, due to consumer
preference for flat panels.
"We are pleased with our international results," said Bob Willett,
CEO - Best Buy International and chief information officer. "We made
significant improvements in the profitability of our Canadian
operations and continued to prepare for further expansion in China,
followed by Mexico, Turkey and Europe. We are gaining valuable
customer insights around the world, and the performance in the first
quarter was consistent with our expectations."
The company also lowered its new store opening plans in China for
fiscal 2009. The company now expects to open eight to 16 Five Star
stores and one to three Best Buy stores, pending government approval.
The previous guidance was 20 to 25 Five Star openings and five to
eight Best Buy openings. "We are very pleased with our progress in
China, and expect to have a very long and bright future serving
Chinese consumers. While we are working through the timing of our
store openings, our commitment to China as a growth market is
unwavering," added Willett.
Investments in Auction-Rate Securities
At May 31, 2008, Best Buy held $380 million (par value) of
investments in auction-rate securities, the vast majority of which are
AAA/Aaa-rated and collateralized by student loans guaranteed 95
percent to 100 percent by the U.S. government. As previously
disclosed, the company held $417 million (par value) of investments in
auction-rate securities at March 1, 2008. The company continues to
classify all of its investments in auction-rate securities in
non-current assets and carries these investments at par, which
approximates fair value.
The company continues to believe that it will ultimately recover
all amounts invested in these securities, given their high credit
quality. To date, Best Buy has collected all interest due on the
auction-rate securities and expects to continue to do so in the
future. Management does not believe the current illiquidity of these
investments will have a material impact on Best Buy's ability to
execute its business plans.
Store Counts and Shareholder Return Information
During the first quarter of fiscal 2009, the company opened 26
U.S. Best Buy stores, including six of its 45,000-square-foot stores,
18 of its 30,000-square-foot stores, and two of its 20,000-square-foot
stores. At the end of the first quarter, the domestic segment included
949 Best Buy stores, 14 Best Buy Mobile stand-alone stores, seven Geek
Squad stand-alone stores, 13 Magnolia Audio Video stores and 20
Pacific Sales showrooms. The international segment included 161 Five
Star stores and one Best Buy store in China, as well as 133 Future
Shop stores and 51 Best Buy stores in Canada. For the trailing 12
months, the company opened 157 new stores and closed 12 stores. More
details regarding historical store counts and square footage are
available on the company's Web site under "For Our Investors."
On May 14, 2008, the company paid a dividend of 13 cents per
share, or $54 million in the aggregate, which was a 30-percent
increase compared with the dividend per share paid in the prior year's
first quarter.
Best Buy is scheduled to conduct an earnings conference call at 10
a.m. Eastern Time on June 17, 2008. The call is expected to be
available on its Web site both live and after the call at
www.BestBuy.com. The public may access the call by clicking on "For
Our Investors."
The company also is preparing to host its regular meeting of
shareholders at 9:30 a.m. Central Time on Wednesday, June 25, 2008, at
its corporate headquarters. The regular meeting of shareholders is
expected to be Web cast as well.
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:
failure to receive necessary approvals for the transaction; failure to
achieve anticipated benefits of the transaction; and integration
challenges relating to the new venture. Other factors include 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 April 30, 2008. 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 an international 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 more than 1,300 retail stores across the
United States, throughout Canada and in China. Our multi-channel
operations include: Best Buy (BestBuy.com, BestBuy.ca, BestBuy.com.cn
and BestBuyMobile.com), 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.
BEST BUY CO., INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
($ in millions, except per share amounts)
(Unaudited)
Three Months Ended
-------------------
May 31, June 2,
2008 2007
--------- ---------
Revenue $8,990 $7,927
Cost of goods sold 6,857 6,035
--------- ---------
Gross profit 2,133 1,892
Gross profit % 23.7% 23.9%
Selling, general and administrative expenses 1,856 1,626
SG&A % 20.6% 20.5%
--------- ---------
Operating income 277 266
Other income (expense)
Investment income and other 21 44
Interest expense (13) (7)
--------- ---------
Earnings before income taxes, minority interest
and equity in loss of affiliates 285 303
Income tax expense 106 113
Effective tax rate 37.1% 37.1%
Minority interest 1 2
Equity in loss of affiliates (1) ---
--------- ---------
Net earnings $ 179 $ 192
========= =========
Earnings per share
Basic $ 0.44 $ 0.40
Diluted(1) $ 0.43 $ 0.39
Dividends declared per common share $ 0.13 $ 0.10
Weighted average common shares outstanding (in
millions)
Basic 411.4 478.8
Diluted(1) 423.4 491.5
(1) The calculation of diluted earnings per share assumes the
conversion of the company's convertible debentures due in 2022 into
8.8 million shares of common stock and adds back the related after-tax
interest expense of $1.5 for both the three months ended May 31, 2008,
and June 2, 2007.
BEST BUY CO., INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
($ in millions)
(Unaudited)
May 31, June 2,
2008 2007
---------- ----------
ASSETS
Current assets
Cash and cash equivalents $ 1,475 $ 1,366
Short-term investments 68 1,436
Receivables 533 476
Merchandise inventories 5,005 4,298
Other current assets 652 730
---------- ----------
Total current assets 7,733 8,306
Net property & equipment 3,456 3,026
Goodwill 1,085 1,049
Tradenames 98 93
Equity and other investments 529 348
Other assets 330 320
---------- ----------
TOTAL ASSETS $13,231 $13,142
========== ==========
LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 4,697 $ 3,957
Accrued liabilities 1,821 1,662
Short-term debt 469 48
Current portion of long-term debt 40 19
---------- ----------
Total current liabilities 7,027 5,686
Long-term liabilities 880 655
Long-term debt 650 598
Minority interests 40 33
Shareholders' equity 4,634 6,170
---------- ----------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $13,231 $13,142
========== ==========
Certain amounts have been reclassified to conform to the current
presentation. These reclassifications had no effect on previously
reported total assets, liabilities or shareholders' equity.
CONTACT: Best Buy Co., Inc.
Media Contacts:
Susan Busch, 612-291-6114
Director of Corporate PR
susan.busch@bestbuy.com
or
Kelly Groehler, 612-291-6115
Senior 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
Wade Bronson, 612-291-5693
Director of Investor Relations
wade.bronson@bestbuy.com
SOURCE: Best Buy Co., Inc.