Best Buy 2013 Annual Report Download - page 34

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34
Our gross profit rate decreased 1.0% of revenue in fiscal 2013 (11-month). Our Domestic and International segments each
accounted for a decrease of 0.5% of revenue. For further discussion of each segment's gross profit rate changes, see Segment
Performance Summary, below.
The SG&A rate increased 0.8% of revenue in fiscal 2013 (11-month). Our Domestic and International segments contributed a
rate increase of 0.6% of revenue and 0.2% of revenue, respectively. For further discussion of each segment's SG&A rate
changes, see Segment Performance Summary, below.
We recorded restructuring charges of $451 million in fiscal 2013 (11-month), which included $1 million of inventory write-
downs recorded in cost of goods sold. Our Domestic segment recorded $328 million of restructuring charges, including $1
million of inventory write-downs, in fiscal 2013 (11-month), and our International segment recorded $123 million of
restructuring charges in fiscal 2013 (11-month). These restructuring charges resulted in a decrease in our operating income in
fiscal 2013 (11-month) of 1.0% of revenue. We recorded $53 million of restructuring charges in fiscal 2012 (11-month recast),
which included $19 million of inventory write-downs recorded in cost of goods sold. Our Domestic and International segments
recorded $38 million and $15 million of restructuring charges, respectively, in fiscal 2012 (11-month recast). The restructuring
charges recorded in fiscal 2012 (11-month recast) resulted in a decrease in our operating income rate of 0.1% of revenue. For
further discussion of each segment’s restructuring charges, see Segment Performance Summary, below.
Our operating income decreased $897 million, or 116.2%, and our operating loss as a percent of revenue decreased to 0.3% of
revenue in fiscal 2013 (11-month), compared to operating income of 1.7% of revenue in fiscal 2012 (11-month recast). The
decrease in our operating income was due to a decrease in gross profit as a result of a decrease in revenue and a decline in the
gross profit rate, an increase in restructuring charges and an increase in SG&A, partially offset by a decrease in goodwill
impairments.
Fiscal 2012 Results Compared With Fiscal 2011
For purposes of this section, fiscal 2012 represents the 12 months ended March 3, 2012 and fiscal 2011 represents the 12
months ended February 26, 2011.
The macroeconomic pressures on consumer spending and the consumer electronics industry trends we experienced in fiscal
2011 largely continued through fiscal 2012. We continued to face declining demand in key product categories, particularly
televisions, notebook computers, gaming and music. These factors have impacted many of the geographic markets in which we
operate. However, we have seen growth in several key product categories. For example, increased consumer demand for
tablets, e-Readers, and associated accessories and services led to revenue growth of these products in all of our global markets.
Further, our focus on gaining market share in appliances in the Domestic segment produced comparable stores sales gains in
fiscal 2012.
The components of the 1.9% revenue increase in fiscal 2012 were as follows:
Net new stores 1.6 %
Impact of foreign currency exchange rate fluctuations 1.5 %
Comparable store sales impact 0.9 %
One less week of revenue for Best Buy Europe(1) (1.6)%
Non-comparable sales channels(2) (0.5)%
Total revenue increase 1.9 %
(1) Represents the incremental revenue associated with stores in our Domestic segment and Canada in fiscal 2012, which had 53 weeks of activity, compared
to 52 weeks in fiscal 2011.
(2) Non-comparable sales channels primarily reflects the impact from revenue we earn from sales of merchandise to wholesalers and dealers, as well as other
non-comparable sales not included within our comparable store sales calculation.
Our gross profit rate decreased 0.4% of revenue in fiscal 2012. A gross profit rate decline in our Domestic segment accounted
for a decrease of 0.5% of revenue, which was partially offset by a 0.1% of revenue increase in our International segment. For
further discussion of each segment's gross profit rate changes, see Segment Performance Summary, below.
The flat SG&A rate in fiscal 2012 was due to a 0.1% of revenue decrease attributable to the decrease in our Domestic segment's
SG&A rate, offset by a 0.1% of revenue increase attributable to the increase in our International segment's SG&A rate. For
further discussion of each segment's SG&A rate changes, see Segment Performance Summary, below.
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