Best Buy 2012 Annual Report Download - page 5

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5
In fiscal 2012, we acquired mindSHIFT Technologies, Inc ("mindSHIFT"), a managed service provider for small and mid-sized
businesses, providing cloud services, data center services and professional services throughout the U.S.
In the future, we expect to see a reduction in the number of large-format stores, a reduction in square footage for certain of our
large-format stores and a continuation of the growth in small-format Best Buy Mobile stores.
International Segment
Our International segment was established in fiscal 2002 with our acquisition of Future Shop Ltd., Canada's largest consumer
electronics retailer. Since that acquisition, we have operated a dual-brand strategy in Canada by introducing the Best Buy
brand, which allows us to retain Future Shop's brand equity and attract more customers by offering a choice of distinct store
experiences.
In fiscal 2007, we acquired a 75% interest in Jiangsu Five Star Appliance Co., Ltd. ("Five Star"), one of China's largest
appliance and consumer electronics retailers. In fiscal 2009, we acquired the remaining 25% interest in Five Star.
In fiscal 2009, we acquired a 50% share in Best Buy Europe Distributions Limited ("Best Buy Europe"). Best Buy Europe is a
venture with CPW, consisting of CPW's former retail and distribution business with nearly 2,400 small-format The Carphone
Warehouse and The Phone House stores, online channels, device insurance operations, and mobile and fixed-line
telecommunication services.
In fiscal 2009, we also expanded our Best Buy Mobile operations to Canada by opening stand-alone stores. We now also offer
the Best Buy Mobile store-within-a-store experience in all Canadian Best Buy branded stores. Also in fiscal 2009, we opened
our first Best Buy branded store in Mexico, located in Mexico City.
As of the end of fiscal 2012, we had closed all of our large-format Best Buy branded stores in China, Turkey and the U.K.
In order to align our fiscal reporting periods and comply with statutory filing requirements in certain foreign jurisdictions, we
consolidate the financial results of our Europe, China and Mexico operations on a two-month lag. Consistent with such
consolidation, the financial and non-financial information presented in this Annual Report on Form 10-K relative to our
Europe, China and Mexico operations is also presented on a two-month lag.
Operations
Domestic Segment
Our Domestic segment is primarily managed by product and service categories, with separate leadership teams responsible for
each category. These teams are responsible for determining how their products and services are marketed through our three
primary channels – retail stores, online and call centers. In addition to these teams, separate teams manage core capabilities
(e.g., human resources and real estate management) and channel operations. Retail store operations are divided into territories
and districts based on geography and store size. District managers monitor store operations and meet regularly with store
managers to discuss performance.
Our U.S. Best Buy, U.S. Best Buy Mobile, Magnolia Audio Video and Pacific Sales stores have developed procedures for
inventory management, transaction processing, customer relations, store administration, product sales and services, staff
training and merchandise display that are standardized within each store brand. Corporate retail management for each store
brand generally controls advertising, merchandise purchasing and pricing, as well as inventory policies. All stores within each
store brand generally operate in the same manner under the standard procedures adjusted to local customer needs.
International Segment
Located throughout eight European countries, The Carphone Warehouse and The Phone House stores are significantly smaller
than our Best Buy branded stores and employ sales associates that provide independent advice on the service and hardware best
suited to each customer. Most phone sales require in-store registration with the mobile phone network operator facilitated by
our employees, allowing the customer to leave the store with a fully active phone and a service contract. Advertising,
merchandise purchasing and pricing and inventory policies for these stores are controlled by corporate retail management in
each respective local market.