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Best Buy Reports Q4 Results

Best Buy Reports Q4 Results

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Published by Leslie Rolander
Best Bury Reports Q4 Results
Best Bury Reports Q4 Results

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Published by: Leslie Rolander on Mar 29, 2012
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01/14/2015

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FinancialNewsRelease-InvestorRelations-BestBuyCo.,Inc.http://phx.corporate-ir.net/phoenix.zhtml?c=83192&p=irol-newsArti...
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OutlinesNewTransformationStrategyDescribesSpecificActionstoImproveBusinessPerformance--FourthQuarterandFullYearEPS:GAAP:lossof($4.89)inthefourthquarter;($3.36)forthefullyear,inclusiveofpreviouslyannouncedchargesAdjusted(non-GAAP):profitof$247inthefourthquarter,up25percent;$3.64forthefullyear,up6percent--TransformationStrategytoFocuson:Multi-yearcostreductionprogramU.S.storeformatimprovementsGrowthinitiatives
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FinancialNewsRelease-InvestorRelations-BestBuyCo.,Inc.http://phx.corporate-ir.net/phoenix.zhtml?c=83192&p=irol-newsArti...
MINNEAPOLIS,March29,2012--BestBuyCo.,Inc.(NYSE:BBY)todayreportedaGAAPnetlossof($1.7)billion,or($4.89)pershare,foritsfourthquarterendedMarch3,2012comparedtonetincomeof$651million,or$1.62perdilutedsharefortheprior-yearperiod.Thefiscalfourthquarter2012resultsinclude$2.6billionofchargesprimarilyrelatedtotheactionsannouncedonNovember7,2011,whichconsistofthepurchaseofCarphoneWarehouseGrouppic's(CPW)shareoftheBestBuyMobileprofitshareagreementandrelatedcosts,anon-cashimpairmentchargetoreflectthewrite-offofBestBuyEuropegoodwill,andrestructuringcharges(primarilyassociatedwithU.K.bigboxpilotstoreclosures).Excludingtheabovecharges,adjusted(non-GAAP)dilutedearningspershareforthefourthquarterwere$2-47,anincreaseof25percentwhencomparedtoadjusteddilutedearningspershareof$1.98fortheprior-yearperiod.Comparablestoresalesforthequarterdeclined2.4percentcomparedtoadeclineof4.7percentfortheprior-yearperiod.ForthefiscalyearendedMarch3,2012,GAAPlosspel'sharetotaled($3.36)comparedtodilutedearningspershareof$3.08infiscal2011.Adjusted(non-GAAP)dilutedearningspershareforthefiscalyeartotaled$3.64,anincreaseof6percentwhencomparedtothepreviousyear'sadjusteddilutedearningspershareof$3.43.Comparablestoresalesforthefiscalyeardeclined1.7percentcomparedtoadeclineof1.8percentfortheprior-yearperiod.Pleasesee"ReconciliationofNon-GAAPFinancialMeasures"attachedtothisreleaseandontheinvestorrelationswebsite,www.invcstors.bestbuy.com,formoredetail.
ACTIONSTOTRANSFORMBUSINESSOPERATIONS
"Inordertohelpmaketechnologyworkforeveryoneofourcustomersandtransformourbusinessastheconsumerelectronicsindustrycontinuestoevolve,wearetakingmajoractionstoimproveouroperatingperformance,"saidBrian
J.
Dunn,CEOofBestBuy.
"As
partofourmulti-channelstrategy,weintendtostrengthenourportfolioofstoreformatsandfootprints---closingsomebigboxstores,modifyingotherstoourenhancedConnectedStoreformat,andaddingBestBuyMobilestand-alonelocations---alltoprovideabettershoppingenvironmentforourcustomersacrossmultiplechannelswhileincreasingpointsofpresence,andtoimproveperformanceandprofitability."Thesechangeswillalsohelplowerouroverallcoststructure,Weintendtoinvestsomeofthesecostsavingsintoofferingnewandimprovedcustomerexperiencesandcompetitiveprices---whichwillhelpdriverevenue.And,overtime,weexpectsomeofthesavingswillfalltothebottomline.Atthesametime,we
will
continuetoaccelerateourkeyinitiatives---growingconnectionsandservices,expandingourdigitalcapabilitiesandgrowingourbusinessinChina."Asaresult,webelievetheseactionswillpositionustogrowearnings,improveROIC,andincreasevaluetoourshareholdersintheyearsahead."
$800MillionMulti-yearCostReductionProgram
Inordertobemoreefficientandalignthecompanywiththeopportunitiesthatwillprovidethegreatestreturns,thecompanyistakingsignificantactionstoloweritscostbase:Planning$800millionincostreductionsbyfiscal2015;includingapproximately$250millioninfiscal2013.TheplannedDomesticsegmentreductionsinclude:Retailstores:$300millionCorporateandsupportstructure:$300millionCostofgoodssold:$200million.Specificactionsintendedtolowercostsareexpectedtoinclude:Theclosureof50U.S.BestBuybigboxstoresinfiscal2013.CostsavingsincorporateandsupportstructurefromITservicessavings,procurementsavingsonnonmerchandisepurchases,areductioninoutsideconsultantservicesandreductionofapproximately400positionsinourcorporateandsupportareas.
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FinancialNewsRelease-InvestorRelations-BestBuyCo.,Inc.http://phx.corporate-ir.netlphoenix.zhtml?c=83l92&p=irol-newsArti...
Savingsincostofgoodssolddrivenbyreductionofproducttransitioncosts,lowerproductreturnandexchangeexpensesandsupplychainefficiencies.
U.S.StoreFormatImprovements
BestBuy'sretailstorestrategyistoincreasepointsofpresence,whiledecreasingoverallsquarefootage,forincreasedflexibilityinamulti-channelenvironment.ThecompanyintendstoremodelkeystoreswithanewConnectedStoreformatinfiscal2013,andtocontinuetobuildoutthesuccessfulBestBuyMobilesmallformatstoresthroughouttheU.S.Basedonresultsfromstorepilotsconductedin2010and2011,BestBuywillbedeploying"at-scale"markettestsofitsnewConnectedStoreformatintheTwinCitiesandSanAntoniometroareas.Thestoreremodelsareexpectedtobecompletedbeforethe2012holidayseason.ConnectedStoresareremodeledbigboxstoresthatfocuson
connectionsu),
servicesandmulti-channelexperiencethroughatotaltransformationofboththestoreandtheoperatingenvironment.Thecompanyexpectstotalbigboxsquarefootageinthesecombinedtestmarketstobereducedbyalmost20percentthroughstoredownsizingandclosures,whilepointsofpresencewillincreasebymorethan20percent.BestBuyexpectstoopenanother100U.S.BestBuyMobilesmallformatstoresinfiscal2013andcontinuestoexpecttohaveatotalof600to800suchstoresbyfiscal2016(from305today).
GrowthInitiatives
BestBuyplanstoinvesttomaximizethelong-term
opportunities
offeredthroughitsexistingfourkeygrowthinitiatives:e-commerce,connections,servicesandChina.Domesticsegmentonlinesalesareexpectedtogrow15percentinfiscal2013andthecompanycontinuestoexpecttoreach$4billionbyfiscal2016.Asannouncedearlierthismonth,StephenGilletthasbeennamedtothenewlycreatedroleofexecutivevicepresidentandpresident,BestBuyDigitalandGlobalBusinessServicestoleadthecompany'sglobaldigitalstrategy.ConnectionsintheU.S.aretargetedtogrow15percentinfiscal2013,drivenbycontinuedmobilephonegrowthandincreasedconnectionsinotherproductcategoriesincludingtabletsandcomputing.RevenuefromDomesticsegmentservicescategoryisexpectedtogrow
10
percentinfiscal2013.InChina,thecompanyplanstoopen50newFiveStarstoresinfiscal2013,including14newmobilestore-within-a-storeconcepts,andcontinuestotarget$4billioninsalesandatotalof400to500(from204today)FiveStarstoresbyfiscal2016.
ImprovedCustomerExperience
BestBuyplanstoexpandthebenefitsunderitsRewardZoneSilverloyaltyprogram,whosemembersaccountforasignificantpercentageofthecompany'sprofit.RewardZoneSilvercustomerswillreceiveexcitingenhancementsincludingfreeexpeditedshipping,premieraccesstomanyofthemostpopularproductsandmajorsalesevents,afreehousecallfromtheGeekSquad,and60-daynohasslereturnsandprice-matchpolicy.Aspartofthecompany'sactionstosignificantlyimprovethecustomerexperience,BestBuywillbemakingimportantchangeslaterthisyeartoitsstoreoperatingmodelthataredesignedtodriveadifferentiatedemployeeexperience.ThecompanyplanstointroduceanewstorelabormodeltobeimplementedinallofitsU.S.bigboxstoresbeforethe2012holidayseasonthatwillprovideincreasedstoreemployeetrainingandanewenhancedcompensationplanthatintroducesfinancialincentivesfordeliveringoncustomerserviceandbusinessgoals.Thenewcompensationplan,whichwillbeimplementedacrossthecompanylaterthisyear,isbasedonamodelthathasbeenusedsuccessfullyinthecompany'sBestBuyMobilestores.
FOURTIIOUARTERANDFULLYEARFISCAL
2012
FINANCIALRESULTS
AsannouncedNovember7,2011,netoperatingresultsfromtheclosedBestBuystoresintheU.K.,ChinaandTurkey,alongwithotherrecentlysoldbusinesses,arenowtreatedasdiscontinuedoperations.Allinformationregardingthecompany'soperatingresults,unlessotherwisenoted,pertainstoitscontinuingoperations.
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