Best Buy 2002 Annual Report Download - page 26

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For fiscal 2002, Musicland revenues were $1.9 billion,
slightly lower than last year’s pro forma results.
Comparable store sales decreased 0.9% for the fiscal year
primarily due to reduced mall traffic and softness in sales
of prerecorded music and VHS movies. The comparable
store sales decline was partially offset by increased
sales of DVD movies and the introduction of new gaming
hardware and software.
Musicland’s fiscal 2002 gross profit margin of 35.0% of
revenues declined by 1.9% of revenues compared with
last year’s pro forma results. The decline was primarily due
to a change in the product mix, including soft sales of
prerecorded music and increased sales of lower-margin
DVD movies and gaming hardware and software.
24 MD&A
Musicland
The following table presents selected financial data for the Musicland segment for each of the past two fiscal years
($ in millions):
Segment Performance Summary Pro forma
(unaudited) 2002 2001(1)
Revenues $1,886 $1,915
Comparable stores sales % change(2) (0.9%) (0.
7
%)
Gross profit as a % of revenues 35.0% 36.9%
SG&A as a % of revenues 33.5% 32.9%
Operating income $29 $
77
Operating income as a % of revenues 1.6% 4.0%
(1) Pro forma results of operations at Musicland, including the amortization of goodwill, as though it had been acquired at the
beginning of fiscal 2001.
(2) Includes sales at Musicland stores open at least 12 months. Relocated stores are included in the comparable store sales calculation.
improved productivity and comparison with prior fiscal
year expenses, which included the launch of BestBuy.com,
our entry into the New York market and the write-off of
certain e-commerce investments. In addition, our focus on
controlling expenses, such as corporate hiring and outside
consulting costs, positively impacted our SG&A rate.
Overall, the results of operations at Magnolia Hi-Fi did not
significantly impact the Best Buy segment’s financial results.
During fiscal 2002, we opened 62 new Best Buy stores,
including 20 stores in our 30,000-square-foot format.
The openings brought our total to 481 stores, compared
with 419 stores at the end of fiscal 2001. In addition, we
remodeled three Best Buy stores and expanded two
Best Buy stores during fiscal
2002
, compared with no
remodeled stores and two expanded stores in fiscal
2001
.
Magnolia Hi-Fi
continued to operate 13 stores,
unchanged from
fiscal 2001.