Best Buy 2006 Annual Report Download - page 22

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8
which are our primary growth and profit drivers. Musicland’s
financial results have been classified separately as
discontinued operations in our consolidated financial
statements for all periods presented.
Operations
Domestic Segment
U.S. Best Buy store operations are organized into eight
territories. Each territory is divided into districtsand is under
the management of a retail field officer who oversees store
performance through district managers. District managers
monitor store operations and meet regularly with store
managers to discuss merchandising, new product
introductions, sales promotions, customer loyalty programs,
employee satisfaction surveys andstore operating
performance. Similar meetings are conducted at the
corporate level with divisional and regional management.
Each district also has a loss prevention manager, with
product security personnel employed at eachstore to
control physical inventorylosses. Advertising, merchandise
buying and pricing, as well as inventory policies are
centrally controlled.
U.S. Best Buy stores are generally open 78 hours per week,
seven days a week, with extended holiday hours. An
average store is typically staffed by one general manager
and five managers. The average staff per store in fiscal
2006 was approximately 132 employees and varied by
store depending on sales volumes.
U.S. Best Buy stores follow a standardized and detailed
operatingprocedure called our Standard Operating
Platform (SOP). The SOP includes procedures for inventory
management, transaction processing, customerrelations,
store administration, product sales and services, and
merchandise display. All stores operate in the same manner
under the SOP.
MagnoliaAudio Video stores are typically managed by a
store manager, an audio/video sales manager and, if the
store contains mobile products, a mobile electronics sales
manager. MagnoliaAudio Video stores are generally open
72 hours per week, seven days a week. Depending on an
individual store’s volume and product offerings, store
staffing includes six to 20 commissioned sales personnel
and one to eight hourly personnel. Corporate management
for Magnolia Audio Video stores centrally controls
advertising, merchandise buying and pricing, as well as
inventory policies.
International Segment
International store operations are organized to support two
brands, each headed by a vice president. Each vice
president has national management who closely monitors
store operations and meets regularly with store managers to
review management and staff training programs, customer
feedback and requests, store operating performance and
other matters. Meetings involving store management,
product managers,advertising, financial and administrative
staff, as well as senior management, are held quarterly to
review operating results and to establish future objectives.
International stores are generally open 60 to 75 hours per
week, seven days a week. A typical Future Shop store is
staffed by a general manager, an operations manager,
several department managers and 48to 95 sales
associates, as well as part-time sales associates. A typical
Canadian Best Buy store is staffed with ageneral manager;
assistant managers for operations, merchandising, inventory
and sales; and80 to 110 sales associates, including full-
time and part-time sales associates. The number ofsales
associates is dependent upon store size and sales volume.
International stores use a standardized operating system.
The operating system includes procedures for inventory
management, transaction processing, customer relations,
store administration, staff trainingand performance
appraisals, as well as merchandise display. Advertising,
merchandise buying and pricing, and inventory policies are
centrally controlled.
Merchandise
Domestic Segment
U.S. Best Buy stores offer merchandise in four product
groups: consumer electronics, home-office, entertainment
software and appliances. Consumer electronics, the largest
product group for fiscal 2006based on revenue, consists of
video and audio products andservices. Video products
include televisions, digital cameras, DVD players, digital
camcorders and accessories. Audio products include MP3
players, home theater audio systems, mobile electronics
including car stereo and satellite radio products,and
related accessories. The home-office product group