Best Buy 2008 Annual Report Download - page 4

2 | Best Buy Fiscal 2008 Annual Report
So, how do we realize this opportunity? It is this premise
that has had us talking about customer centricity for the
last fi ve years. Best Buy is being re-engineered from a product-
centered company to one with the capability to provide a
trusted perspective in this exciting but challenging digital era.
Recognizing customers’ desires
We started this journey by learning how to see the differences
in the desires of our consumers, and then learning how to
meet them. That infl uenced how we deployed assets such as
the Geek Squad®, in-home delivery, Magnolia Home Theater
rooms and now Best Buy Mobile, which we are scaling this
year through our relationship with The Carphone Warehouse.
But the most important opportunity we see is the repurposing
of the talented people in our stores. We want our employees
to engage with our customers and bring to bear a wide
menu of capabilities to serve our customers’ individual wants
and needs. Our enterprise’s unique, core capabilities lie
in the ability of our line-level staff to recognize customers’
desires and our support teams’ ability to tailor new offers
and to provide skill sets based on those customer needs.
In the United States, we intend to use the current, challenging
economic climate as an impetus to speed the development
of these skill sets.
Looking ahead to fi scal 2009
This sense of rich opportunities to satisfy unmet customer
needs in the connected world was foremost in our minds in
early April 2008, when we provided our earnings guidance
for fi scal 2009. We projected a range for diluted earnings
per share of $3.25 to $3.40 for the fi scal year, the midpoint
of which represents approximately 7-percent EPS growth.
This projection refl ects our estimate of a 1-percent to
3-percent comparable store sales increase; compression
in our operating profi t rate of approximately 30 to 40 basis
points, due to slower revenue growth combined with
continued investment in strategic growth platforms (including
Best Buy Mobile and international expansion); and continued
share repurchases.
At the end of the day, our people, their behaviors and their
culture were the catalysts for forecasting this level of growth,
despite a choppy macro-economic climate and industry
expectations for more modest growth than last year.
Our guidance also refl ects our conscious decision to invest in
areas that differentiate us from competitors. We hold ourselves
to very high standards in investing your capital—that is
unchanged. This year’s investment plans include:
• Opening approximately 140 new stores to increase
customer convenience and enhancing our offerings with more
Apple and Best Buy Mobile store-within-a-store locations;
• Launching our fi rst stores and Web sites in Mexico and,
in early fi
scal 2010, Turkey, so that we can reach customers
in these high-growth markets;
• Improving our Web sites with expanded product
assortments and services, including new auction and outlet
sites, based on consumer interest in this channel;
• Enhancing our Reward Zone programs in the United
States and Canada, improving our services offerings and
maintaining our staffi ng levels in our stores in order to
boost customer loyalty; and
• Continuing to enhance our supply chain and information
technology infrastructure to support and to enable our
continued growth.
We also intend to explore several new revenue categories,
customer segments and businesses that are adjacent to
or complementary to what we have today. For example,
we plan to extend our offerings of select musical instruments
to more U.S. Best Buy stores, to continue to expand
our offerings to female and Hispanic customers, and
to begin selling our private-label products to other retailers
internationally.