Best Buy 2012 Annual Report Download - page 33

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We also currently plan to report the first quarter of fiscal year 2013 as a three-month period, which will include the results of
the last month of fiscal year 2012.
Overview
We are a multi-national retailer of consumer electronics, computing and mobile phone products, entertainment products,
appliances and related services. We operate two reportable segments: Domestic and International. The Domestic segment is
comprised of all operations within the U.S. and its territories. The International segment is comprised of all operations outside
the U.S. and its territories.
Our business, like that of many retailers, is seasonal. Historically, we have realized more of our revenue and earnings in the
fiscal fourth quarter, which includes the majority of the holiday shopping season in the U.S., Europe and Canada, than in any
other fiscal quarter.
While some of the products and services we offer are viewed by consumers as essential, others are viewed as discretionary
purchases. Consequently, our results of operations are susceptible to changes in consumer confidence levels and
macroeconomic factors such as unemployment, consumer credit availability and the condition of the housing market.
Consumers have maintained a cautious approach to discretionary spending due to continued economic pressures. Consequently,
customer traffic and spending patterns continue to be difficult to predict. Other factors that directly impact our performance are
product life-cycles (including the introduction and adoption of new technology) and the competitive retail environment for our
products and services. As a result of these factors, predicting our future revenue and net earnings is difficult. By providing
access to a wide selection of products and accessories; a vast array of service offerings, such as extended warranties,
installation and repair; an integrated multi-channel approach; and a knowledgeable sales staff to help our customers select their
devices and access related services and content, we believe we offer our customers a differentiated value proposition.
Disciplined capital allocation, working capital management and expense control remain key priorities for us as we navigate
through the current environment.
Throughout this MD&A, we refer to comparable store sales. Comparable store sales is a commonly used metric in the retail
industry, which compares revenue for a particular period with the corresponding period in the prior year, excluding the impact
of sales from new stores opened. Our comparable store sales is comprised of revenue from stores operating for at least 14 full
months, as well as revenue related to call centers, Web sites and our other comparable sales channels. Revenue we earn from
sales of merchandise to wholesalers or dealers is not included within our comparable store sales calculation. Relocated,
remodeled and expanded 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 portion of our calculation of the comparable store sales percentage
change attributable to our International segment 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, our method of calculating comparable
store sales may not be the same as other retailers' methods. The calculation of comparable store sales excludes the impact of the
extra week of revenue in the fourth quarter of fiscal 2012, as well as revenue from discontinued operations.
In our discussions of the operating results of our consolidated business and our International segment, we sometimes refer to
the impact of changes in foreign currency exchange rates or the impact of foreign currency exchange rate fluctuations, which
are references to the differences between the foreign currency exchange rates we use to convert the International segment’s
operating results from local currencies into U.S. dollars for reporting purposes. The impact of foreign currency exchange rate
fluctuations is typically calculated as the difference between current period activity translated using the current period’s
currency exchange rates and the comparable prior-year period’s currency exchange rates. We use this method to calculate the
impact of changes in foreign currency exchange rates for all countries where the functional currency is not the U.S. dollar.
In our discussions of the operating results below, we sometimes refer to the impact of net new stores on our results of
operations. The key factors that dictate the impact that the net new stores have on our operating results include: (i) the size and
format of new stores, as we operate stores ranging from approximately 1,000 square feet to approximately 50,000 square feet;
(ii) the length of time the stores were open during the period; and (iii) the overall success of new store launches.