Best Buy 2012 Annual Report Download - page 39

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Fiscal 2012 Results Compared With Fiscal 2011
In fiscal 2012, the results of our Domestic segment were impacted by both macroeconomic factors and also specific consumer
electronics industry challenges. The U.S. continued to face an unsteady recovery from the economic turbulence that began in
late 2008, which has led to a constrained, and thus more price and value conscious consumer. The changes in consumer
behaviors, coupled with product life-cycle declines in televisions, gaming and notebook computers, resulted in a comparable
store sales decline in fiscal 2012. We have, however, benefited from product innovation and strong consumer interest in
products such as tablets, e-Readers and mobile phones, which all experienced sales growth in fiscal 2012. In addition, our focus
on growing our market share in appliances led to sales growth throughout fiscal 2012.
In light of continued strong competition in the consumer electronics industry and greater price transparency for customers, we
increased our promotional activity, especially during the holiday season, to drive market share gains and customer traffic.
While we believe these actions were effective in driving our overall results, they also contributed to a gross profit rate decline.
The components of the 1.5% revenue increase in the Domestic segment in fiscal 2012 were as follows:
Extra week of revenue(1) 1.8 %
Net new stores 1.3 %
Comparable store sales impact (1.6)%
Total revenue increase 1.5 %
(1) Represents the incremental revenue associated with stores in our Domestic segment in fiscal 2012, which had 53 weeks of activity, compared to 52 weeks
in fiscal 2011.
The impact of net new stores on our revenue is a result of net store changes during the past 12 months, as well as stores opened
in the prior fiscal year that are not included in comparable store sales due to the timing of their opening. The addition of large-
format Best Buy branded stores contributed the majority of the total change in revenue associated with net new stores. The
addition of small-format Best Buy Mobile stand-alone stores contributed a smaller portion of the revenue increase due to the
following factors: (1) their smaller square footage; (2) their limited category focus compared to our large-format stores; and (3)
the majority of fiscal 2012 openings taking place in the second half of the fiscal year.
The following table presents the Domestic segment's revenue mix percentages and comparable store sales percentage changes
by revenue category in fiscal 2012 and 2011:
Revenue Mix Summary Comparable Store Sales Summary
Year Ended Year Ended
March 3, 2012 February 26, 2011 March 3, 2012 February 26, 2011
Consumer Electronics 36% 37% (5.4)% (6.3)%
Computing and Mobile Phones(1) 40% 37% 6.0 % 3.6 %
Entertainment 12% 14% (16.3)% (13.3)%
Appliances 5% 5% 10.6 % 7.0 %
Services 6% 6% (0.6)% 0.5 %
Other 1% 1% n/a n/a
Total 100% 100% (1.6)% (3.0)%
(1) During the first quarter of fiscal 2012, the revenue category previously referred to as "Home Office" was renamed "Computing and Mobile Phones" to
more clearly reflect the key products included within the revenue category. However, the composition of the products within this revenue category has not
changed from the previous periods' disclosures.
The following is a description of the notable comparable store sales changes in our Domestic segment by revenue category:
• Consumer Electronics: The 5.4% comparable store sales decline was driven primarily by decreases in the sales of
digital imaging products and televisions. The decrease in digital imaging products resulted from a combination of
supply chain constraints due to natural disasters in Asia in both the early and later portions of the fiscal year, as well as
overall industry softness. The decrease in television sales was mainly due to a decline in average selling price. The
declines were partially offset by strong sales of e-Readers due to high customer interest, new product launches and our
broad assortment of such products.