Best Buy 2011 Annual Report Download - page 35

earnings is difficult. Disciplined capital allocation and working capital management and expense control remain key
priorities for us as we navigate through the current environment. By providing access to a wide selection of consumer
electronics products and accessories; a vast array of service offerings, such as extended warranties, installation and repair;
and a knowledgeable sales staff to help our customers select and connect their devices, we believe we offer our customers
a differentiated value proposition.
Throughout this MD&A, we refer to comparable store sales. Comparable store sales is a measure commonly used in the
retail industry, which indicates store performance by measuring the growth in revenue for certain stores for a particular
period over the corresponding period in the prior year. Our comparable store sales is comprised of revenue from stores
operating for at least 14 full months, as well as revenue related to call centers, Web sites and our other comparable sales
channels. Revenue we earn from sales of merchandise to wholesalers or dealers is not included within our comparable
store sales calculation. Relocated, remodeled and expanded 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 the acquisition. The portion of
our calculation of the comparable store sales percentage change attributable to our International segment excludes the
effect of fluctuations in foreign currency exchange rates. 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.
In our discussions of the operating results of our consolidated business and our International segment, we sometimes refer
to the impact of changes in foreign currency exchange rates and currency exchange rate fluctuations, which are references
to the differences between the foreign currency exchange rates we use to convert the International segment’s operating
results from local currencies into U.S. dollars for reporting purposes. The impact of foreign currency exchange rate
fluctuations is typically calculated as the difference between current period activity translated using the current period’s
currency exchange rates and the comparable prior-year period’s currency exchange rates. We use this method for all
countries where the functional currency is not the U.S. dollar.
Business Strategy and Core Philosophies
Broadly defined, our Connected World strategy is based on the goal to demystify and humanize technology to help
customers get the most out of the rapidly expanding role that technology plays in their lives. The assets we leverage to
bring this strategy to life include our approximately 180,000 employees around the world and the dedication and
expertise they bring; valuable relationships with our vendors; our brand names and reputation; and our unique multi-
channel model which provides customer touch point opportunities through retail store locations, Web sites, mobile
applications and call centers.
The Connected World gives us access to a much larger addressable market than just the traditional consumer electronics
hardware market. While a large part of the traditional focus of our business has been on consumer electronics products,
we have significant incremental opportunities in selling accessories, content, connections and services.
Our three primary strategic priorities are:
Capture New Growth Opportunities and Target Online Opportunities. The unrelenting pace of change in technology
provides both opportunities and challenges for our customers, and we believe we are well positioned to help them
navigate through these and to enrich their lives through the use of technology.
Our current growth priorities include continuing the recent expansion in Best Buy Mobile, mobile computing (particularly
with the growing selection of tablet computers) and increasing our market share in appliances and gaming. In addition,
we believe our customers will increasingly appreciate our Geek Squad service offerings and innovative purchase options,
such as the recently-launched ‘‘Buy Back’’ program in the U.S. Finally, we foresee opportunities for increasing the number
of connections we sell, a vital proposition to our customers wishing to access people and content such as streaming
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