Best Buy 2003 Annual Report Download - page 145

Total 494 73 — 567
The following table reconciles Domestic stores open at the beginning and end of fiscal 2002:
Total Stores at
End of Fiscal 2001 Stores Opened Stores Closed Total Stores at End of Fiscal 2002
U.S. Best Buy stores 419 62 — 481
Magnolia Hi−Fi stores 13 — — 13
Total 432 62 — 494
During fiscal 2003, we opened 67 new U.S. Best Buy stores, including 33 stores in our 45,000−square−foot format and 34 stores in
our smaller−market formats. At the end of fiscal 2003, we operated 548 U.S. Best Buy stores compared with 481 stores at the end of
fiscal 2002. In addition, we remodeled three U.S. Best Buy stores and expanded one U.S. Best Buy store during fiscal 2003, compared
with three remodeled stores and two expanded stores in fiscal 2002. Magnolia Hi−Fi opened six new stores during fiscal 2003 and
operated 19 stores at the end of the fiscal year. Magnolia Hi−Fi did not remodel or expand any stores during fiscal 2003 or 2002.
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International
The following table presents selected financial data for the International segment for each of the past two fiscal years ($ in millions):
Segment Performance Summary (unaudited) 2003 As−Adjusted 2002(1) 2002(2)
Revenue $ 1,643 $ 1,391 $ 596
Comparable stores sales % gain(3) 4.3% N/A 17.4%
Gross profit as a % of revenue 25.0% 25.0% 23.4%
SG&A as a % of revenue 24.5% 23.1% 19.7%
Operating income $ 8 $ 27 $ 22
Operating income as a % of revenue 0.5% 1.9% 3.7%
(1) As−adjusted information presents the results of operations as though Future Shop had been acquired at the beginning of
fiscal 2002 and conforms the accounting for vendor allowances to the fiscal 2003 method.
(2) Reflects results of operations of Future Shop subsequent to its acquisition in November of fiscal 2002.
(3) Includes revenue at stores and Internet sites operating for at least 14 full months, as well as remodeled and expanded
locations. Relocated stores are excluded from the comparable store sales calculation until at least 14 full months after reopening.
Acquired stores are included in the comparable store sales calculation beginning with the first full quarter following the first
anniversary of the date of acquisition. The calculation of the comparable store sales gain excludes the impact of fluctuations in the
foreign currency exchange rates.
The International segment generated operating income of $8 million in fiscal 2003, compared with $27 million on an as−adjusted
basis in the prior fiscal year. The decline in operating income was primarily due to higher SG&A, partially offset by increased gross
profits resulting from revenue growth.
International revenue increased 18% to $1.6 billion, compared with $1.4 billion last fiscal year. New store openings and a 4.3%
comparable store sales gain drove the increase in revenue. Approximately four−fifths of the revenue gain was attributable to the
opening of new stores in the past two fiscal years. The remainder of the revenue gain was due to the comparable store sales gain. The
comparable store sales gain was driven by increased revenue from entertainment software and consumer electronics products, which
includes rapidly expanding revenue from digital products.
The International gross profit rate was 25.0% of revenue in fiscal 2003, unchanged from the prior fiscal year. The gross profit rate
benefited from a shift in the revenue mix to higher−margin digital products and accessories. The benefit from the higher−margin
revenue mix was offset by rising costs for third−party credit in the latter part of the fiscal year and a more promotional environment.