Best Buy 2008 Annual Report Download - page 44

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(2) Services consists primarily of commissions from the sale of extended service contracts; revenue from computer-related services;
product repair revenue; and delivery and installation revenue derived from home theater, mobile audio and appliances.
(3) Other includes revenue, such as fees received from cardholder account activations, that is recognized over time, resulting in revenue
recognition that is not indicative of sales activity in the current period. Other also includes gift card breakage. These revenue types
are excluded from our comparable store sales calculation. Finally, other includes revenue from the sale of products that are not
related to our core offerings. For these reasons, we do not provide a comparable store sales metric for this revenue category.
Our Domestic segment’s comparable store sales gain in and greater selection of software. The comparable store
fiscal 2008 benefited from a higher average transaction sales gain was partially offset by continued declines in
amount driven by the continued growth in sales of sales of CDs and DVDs.
higher-ticket items, including video gaming hardware, A 5.0% comparable store sales decline in our Domestic
flat-panel televisions and notebook computers. Also segment’s appliances revenue category was driven
contributing to the fiscal 2008 comparable store sales primarily by declines in sales of major appliances and
gain was an increase in online purchases, as we continued small electrics due to soft macro-economic conditions in
to add features and capabilities to our Web sites, the housing sector.
including the launch of a Spanish-language version of
Our Domestic segment’s services revenue category
BestBuy.com and the ability of our loyalty club members to
recorded a 4.1% comparable store sales gain due
redeem Reward Zone certificates online. Revenue from our
primarily to sales growth in home theater installation and
Domestic segment’s online operations increased
computer services, partially offset by declines in sales of
approximately 30% in fiscal 2008 and added to the
extended service contracts.
overall comparable store sales increase.
Our Domestic segment’s gross profit rate in fiscal 2008
Our Domestic segment’s consumer electronics revenue
decreased by 0.3% of revenue to 24.5% of revenue. The
category posted a 2.4% comparable store sales decline,
decrease was due primarily to a lower-margin revenue
driven by declines in tube and projection televisions and
mix, including increased revenue from video gaming
MP3 players and accessories, which was offset by gains in
hardware and notebook computers. These declines were
the sales of flat-panel televisions and navigation products.
partially offset by better promotional spending in home
A 7.0% comparable store sales gain in our Domestic theater, music and movies, as well as lower financing rates
segment’s home office revenue category was driven and Reward Zone costs.
primarily by increased sales of notebook computers. The
Our Domestic segment’s SG&A rate in fiscal 2008
comparable store sales gain was partially offset by
decreased by 0.2% of revenue to 18.5% of revenue. The
declines in the sales of desktop computers, printers and
improvement was due primarily to the leveraging effect of
monitors.
the 7% growth in revenue and store operating model
Our Domestic segment’s entertainment software revenue improvements, which includes labor efficiencies and
category recorded a 6.1% comparable store sales gain operating procedure changes.
due primarily to sales growth in video gaming hardware
and software, fueled by increased availability of hardware
The following table reconciles Domestic stores open at the beginning and end of fiscal 2008:
Total Total
Stores at Stores at
End of Stores Stores Stores End of
Fiscal 2007 Opened Acquired Closed Fiscal 2008
U.S. Best Buy 822 101 — — 923
Pacific Sales 14 5 — — 19
Magnolia Audio Video 20 — — (7) 13
Best Buy Mobile(1) 54—— 9
U.S. Geek Squad 12 — — (5) 7
Total Domestic stores 873 110 — (12) 971
(1) Fiscal 2007 store counts have been adjusted to reflect Best Buy Mobile stand-alone stores test marketed in fiscal 2007.
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