Best Buy 2016 Annual Report Download - page 41

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33
Segment Performance Summary
Domestic Segment
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 2016 2015 2014
Revenue $ 36,365 $ 36,055 $35,831
Revenue gain % 0.9 % 0.6% 7.9 %
Comparable sales % gain (decline)(1) 0.5 % 1.0% (0.4)%
Comparable sales % gain (decline) excluding the estimated impact of installment
billing(1)(2) (0.1)% 0.5% (0.4)%
Gross profit $ 8,484 $ 8,080 $ 8,274
Gross profit as % of revenue 23.3 % 22.4% 23.1 %
SG&A $ 6,897 $ 6,639 $ 7,006
SG&A as % of revenue 19.0 % 18.4% 19.6 %
Restructuring charges $ 2 $ 4 $ 123
Operating income $ 1,585 $ 1,437 $ 1,145
Operating income as % of revenue 4.4 % 4.0% 3.2 %
Selected Online Revenue Data:
Online revenue as a % of total segment revenue 11.0 % 9.8% 8.5 %
Comparable online sales % gain(1) 13.5 % 16.7% 19.8 %
(1) Comparable online sales gain is included in the total comparable sales gain (decline) above.
(2) Represents comparable sales excluding the estimated revenue benefit from installment billing.
The following table reconciles our Domestic segment stores open at the end of each of the last three fiscal years:
Fiscal 2014 Fiscal 2015 Fiscal 2016
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 1,055 — (5) 1,050 — (13) 1,037
Best Buy Mobile stand-alone 406 1 (40) 367 — (17) 350
Pacific Sales 30 — (1)29—
(1)28
Magnolia Audio Video 4 — (2)2—
(2)—
Total Domestic segment stores 1,495 1 (48) 1,448 — (33) 1,415
We continuously monitor store performance. As we approach the expiration date of our stores leases, we evaluate various
options for each location, including whether a store should remain open.
Fiscal 2016 Results Compared With Fiscal 2015
We offer extended protection plans that are managed by third party insurers. We may also be eligible to receive profit-sharing
payments, depending on the performance of the portfolio. When performance of the portfolio is strong and the cost to the third
party insurer declines, we are entitled to share in the excess profits. In fiscal 2016, we recognized $148 million of such profit-
share revenue, with an equal impact to gross profit and operating income. We exclude such profit-share revenue from
comparable sales calculations. The amount recognized in fiscal 2016 was substantially higher than for prior periods. The
unusually strong performance of the portfolio for fiscal 2016, which particularly related to mobile phones, was due to changes
to the design of our extended service plans, improvements to our repair and fulfillment operations and industry trends. These
trends have also led to lower revenues from repairs we undertake on behalf of the insurers, as discussed further below. The
premiums we pay to insurers are periodically adjusted to reflect such trends and consequently we do not expect profit share
payments to continue at this level in future periods.