Best Buy 2008 Annual Report Download - page 40

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non-comparable store sales generated from the U.S. Best Buy stores, the Best Buy Mobile
acquisition of Five Star, Pacific Sales and Speakeasy; store-within-a-store experience to 181 new and existing
and favorable fluctuations in foreign currency exchange U.S. Best Buy stores and 44 Magnolia Home Theater
rates, partially offset by the impact of an extra week of rooms to new and existing U.S. Best Buy stores,
business in fiscal 2007. bringing the total number of Magnolia Home Theater
rooms to 346 at the end of fiscal 2008.
• Our gross profit rate in fiscal 2008 decreased by 0.5%
of revenue to 23.9% of revenue. The decrease was due • Effective with the cash dividend paid in the third quarter
primarily to increased sales of lower-margin products, of fiscal 2008, we increased our quarterly cash
including increased revenue from notebook computers dividend per common share by 30%, to $0.13 per
and video gaming hardware. Our China operations, common share. During fiscal 2008, we made four
which carry a significantly lower gross profit rate than dividend payments totaling $0.46 per common share,
our other operations, reduced our gross profit rate by or $204 million in the aggregate.
approximately 0.2% of revenue in fiscal 2008. • During fiscal 2008, we purchased and retired
• Our SG&A rate in fiscal 2008 decreased by 0.3% of 75.6 million shares of our common stock at a cost of
revenue to 18.5% of revenue. The improvement was $3.5 billion pursuant to our share repurchase
due primarily to the leveraging effect of the 11% programs.
growth in revenue and store operating model • In fiscal 2008, we and The Best Buy Children’s
improvements. Our China operations, which carry a Foundation contributed approximately $32 million to
significantly lower SG&A rate than our other local communities. The Best Buy Children’s Foundation
operations, reduced our SG&A rate by approximately supports educational programs that integrate and
0.1% of revenue in fiscal 2008. leverage today’s technology.
• During fiscal 2008, we added the Apple
store-within-a-store experience to 357 new and existing
Consolidated Results
The following table presents selected consolidated financial data for each of the past three fiscal years ($ in millions,
except per share amounts):
Consolidated Performance Summary 2008 2007(1) 2006
Revenue $40,023 $35,934 $30,848
Revenue gain % 11% 16% 12%
Comparable store sales % gain(2) 2.9% 5.0% 4.9%
Gross profit as % of revenue 23.9% 24.4% 25.0%
SG&A as % of revenue 18.5% 18.8% 19.7%
Operating income $ 2,161 $ 1,999 $ 1,644
Operating income as % of revenue 5.4% 5.6% 5.3%
Net earnings $ 1,407 $ 1,377 $ 1,140
Diluted earnings per share $ 3.12 $ 2.79 $ 2.27
(1) Fiscal 2007 included 53 weeks. Fiscal 2008 and 2006 each included 52 weeks.
(2) Comprised of revenue at stores, call centers and Web 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 percentage gain excludes the effect of
fluctuations in foreign currency exchange rates. All comparable store sales percentage calculations reflect an equal number of
weeks. The method of calculating comparable store sales varies across the retail industry. As a result, our method of calculating
comparable store sales may not be the same as other retailers’ methods.
2007. The modest increase in net earnings was driven by
Fiscal 2008 Results Compared With Fiscal 2007
revenue growth and a decrease in our SG&A rate, offset
Fiscal 2008 net earnings were slightly more than by a decrease in our gross profit rate and a higher
$1.4 billion, or $3.12 per diluted share, compared with effective income tax rate. The increase in net earnings per
nearly $1.4 billion, or $2.79 per diluted share, in fiscal
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