Best Buy 2008 Annual Report Download - page 46

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Comparable store sales of major appliances were flat in computers and video gaming hardware. Also contributing
to the decrease was a more promotional environment in
fiscal 2007, as benefits from the expansion of our
the consumer electronics and home office revenue
improved appliance assortments were offset by a softer
categories.
housing market.
Our Domestic segment’s SG&A rate in fiscal 2007
A 9.0% comparable store sale gain in our Domestic
decreased by 0.8% of revenue to 18.7% of revenue. The
segment’s services revenue category was driven primarily
improvement was due primarily to the leveraging effect of the
by sales growth in home theater installation and computer
13% growth in revenue and reduced performance-based
services partially offset by declines in the sales of extended
incentive compensation. Also contributing to the
service contracts.
improvement, in order of impact, were controlled expenses
Our Domestic segment’s gross profit rate in fiscal 2007 related to our strategic initiatives and expense reduction
decreased by 0.5% of revenue to 24.8% of revenue. The efforts. These factors were partially offset by expenses related
decrease was due primarily to a lower-margin revenue to increased asset impairments, litigation and business
mix, including increased revenue from notebook closure costs.
International
The following table presents selected financial data for our International segment for each of the past three fiscal years ($
in millions):
International Segment Performance Summary 2008 2007(1)(2) 2006
Revenue $6,695 $4,903 $3,468
Revenue gain % 37% 41% 23%
Comparable store sales % gain(3) 9.0% 11.7% 2.8%
Gross profit as % of revenue 20.7% 21.6% 22.9%
SG&A as % of revenue 18.3% 19.6% 21.3%
Operating income $ 162 $ 99 $ 56
Operating income as % of revenue 2.4% 2.0% 1.6%
(1) Fiscal 2007 included 53 weeks. Fiscal 2008 and 2006 each included 52 weeks.
(2) Fiscal 2007 amounts have been adjusted to conform to the current-year presentation, which allocates to the International segment
certain SG&A support costs previously reported as part of the Domestic segment.
(3) 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 acquisition. The calculation of the comparable store sales percentage gain excludes the effect of
fluctuations in foreign currency exchange rates. All comparable store sales percentage calculations reflect an equal number of
weeks. The method of calculating comparable store sales varies across the retail industry. As a result, our method of calculating
comparable store sales may not be the same as other retailers’ methods.
favorable effect of fluctuations in foreign currency
Fiscal 2008 Results Compared With Fiscal 2007
exchange rates accounted for slightly more than
In fiscal 2008, our International segment’s operating three-tenths of the revenue increase; the non-comparable
income was $162 million, or 2.4% of revenue, compared store sales generated from the acquisition of Five Star
with $99 million, or 2.0% of revenue, in fiscal 2007. The accounted for nearly three-tenths of the revenue increase;
increase in our International segment’s operating income the 9.0% comparable store sales gain accounted for more
resulted primarily from revenue gains and a significant than two-tenths of the revenue increase; and the
improvement in the SG&A rate. These factors were remainder of the revenue increase was due to the net
partially offset by a decrease in the gross profit rate. addition of new Future Shop and Best Buy stores in
Our International segment’s revenue increased 37% to Canada and new Five Star stores in China during the past
$6.7 billion in fiscal 2008, compared with $4.9 billion in fiscal year. Revenue from our International segment’s
fiscal 2007. Excluding the impact of the extra week of online operations increased approximately 12% in fiscal
business in fiscal 2007, revenue increased 38% in fiscal 2008 and added to the overall comparable store sales
2008. Excluding the impact of the extra week, the increase.
38