Best Buy 2012 Annual Report Download - page 38

Download and view the complete annual report

Please find page 38 of the 2012 Best Buy annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 117

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117

38
Our gross profit rate increased 0.7% of revenue in fiscal 2011. Gross profit rate improvements in our Domestic segment
accounted for an increase of 0.7% of revenue. The relatively flat gross profit rate in our International segment had no impact on
the consolidated gross profit rate. For further discussion of each segment's gross profit rate changes, see Segment Performance
Summary, below.
The 0.7% of revenue SG&A rate increase for fiscal 2011 was due to a 0.8% of revenue increase attributable to the increase in
our Domestic segment's SG&A rate, partially offset by a 0.1% of revenue decrease attributable to the decrease in our
International segment's SG&A rate. For further discussion of each segment's SG&A rate changes, see Segment Performance
Summary, below.
We recorded restructuring charges of $147 million in fiscal 2011, which included $9 million of inventory write-downs recorded
in cost of goods sold. Our Domestic segment recorded $40 million of restructuring charges in fiscal 2011, and our International
segment recorded $107 million of restructuring charges in fiscal 2011. These restructuring charges resulted in a decrease in our
operating income in fiscal 2011 of 0.3% of revenue. For further discussion of each segment’s restructuring charges, see
Segment Performance Summary, below.
Our operating income and our operating income rate remained flat in fiscal 2011 compared to fiscal 2010. The operating
income rate was driven by an increase in our gross profit rate, offset by an increase in our SG&A rate and increased
restructuring charges. Our operating income in fiscal 2011 included $147 million of restructuring charges recorded in the fiscal
fourth quarter, compared to $52 million of restructuring charges recorded in fiscal 2010.
Segment Performance Summary
Domestic
The following table presents selected financial data for our Domestic segment for each of the past three fiscal years ($ in
millions):
Domestic Segment Performance Summary 2012 2011 2010
Revenue $ 37,615 $ 37,070 $ 37,138
Revenue gain (decline) % 1.5 % (0.2)% 6.3%
Comparable store sales (decline) gain % (1.6)% (3.0)% 1.7%
Gross profit $ 9,186 $ 9,314 $ 8,964
Gross profit as % of revenue 24.4 % 25.1 % 24.1%
SG&A $ 7,307 $ 7,229 $ 6,836
SG&A as % of revenue 19.4 % 19.5 % 18.4%
Restructuring charges $ 24 $ 31 $ 25
Operating income $ 1,855 $ 2,054 $ 2,103
Operating income as % of revenue 4.9 % 5.5 % 5.7%
The following table reconciles our Domestic segment stores open at the end of each of the last three fiscal years:
Fiscal 2010 Fiscal 2011 Fiscal 2012
Total Stores
at End of
Fiscal Year Stores
Opened Stores
Closed
Total Stores
at End of
Fiscal Year Stores
Opened Stores
Closed
Total Stores
at End of
Fiscal Year
Best Buy 1,069 31 (1) 1,099 7 (3) 1,103
Best Buy Mobile stand-alone 74 103 — 177 128 — 305
Pacific Sales 35 — — 35 — (1) 34
Magnolia Audio Video 6 — — 6 — (1) 5
Geek Squad 6 — (6) — — — —
Total Domestic segment stores 1,190 134 (7) 1,317 135 (5) 1,447