Best Buy 2013 Annual Report Download - page 30

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Relocated stores, as well as remodeled, expanded, and downsized stores closed more than 14 days, 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
calculation of comparable store sales excludes the impact of the extra week of revenue in the fourth quarter of fiscal 2012, as
well as revenue from discontinued operations. 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 or the impact of foreign 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 to calculate the
impact of changes in foreign currency exchange rates for all countries where the functional currency is not the U.S. dollar.
In our discussions of the operating results below, we sometimes refer to the impact of net new stores on our results of
operations. The key factors that dictate the impact that the net new stores have on our operating results include: (i) store
opening and closing decisions; (ii) the size and format of new stores, as we operate stores ranging from approximately 1,000
square feet to approximately 50,000 square feet; (iii) the length of time the stores were open during the period; and (iv) the
overall success of new store launches.
Business Strategy and Core Philosophies
In November 2012, we announced our priorities to strengthen our operating and financial performance. As part of this
announcement, we provided a diagnosis of our strengths and weaknesses and two main areas of focus: (1) stabilizing and
improving our comparable store sales, and (2) increasing profitability across both of our segments. In addition, we unveiled our
Renew Blue strategy with the goal of making Best Buy the preferred authority and destination for technology products and
services. The pillars supporting our Renew Blue strategy are as follows:
• Reinvigorate and rejuvenate the customer experience
• Attract and inspire leaders and employees
• Work with vendor partners to innovate and drive value
• Increase return on invested capital
• Continue our leadership role in positively impacting our world
In this context, we believe fiscal 2014 will be a year of transition for Best Buy. We intend to build on the momentum from the
fourth quarter of fiscal 2013 (11-month), and our focus in fiscal 2014 will include the following six priorities:
1. Accelerating online growth;
2. Enhancing the multi-channel customer experience;
3. Increasing revenue and gross profit per square foot through enhanced store space optimization and merchandising;
4. Driving down cost of goods sold through supply chain efficiencies;
5. Continuing to gradually optimize the U.S. real estate portfolio; and
6. Reducing selling, general and administrative ("SG&A") costs.
Accelerate online growth. To accelerate online growth, we intend to improve online traffic and conversion by: (1) building a
unified view of the customer across our various platforms that dynamically generates online recommendations for product and
shopping information based on customers' needs and preferences; (2) implementing a new search platform that helps customers
find products more easily with increased relevance; (3) creating product pages that have an integrated and consistent browsing
experience across all devices; (4) enabling seamless access to Reward Zone points management and redemption capabilities;
(5) creating an easy process for customers to add additional products and services, such as extended warranties and Geek Squad
support; and (6) increasing our product assortment and enhancing product information. We expect to have made substantial
progress against these initiatives by the fiscal 2014 holiday season.
Enhance the multi-channel customer experience. We recently introduced a new metric to track customer service levels known
as “net promoter score” or NPS. NPS will measure not only the satisfaction of customers that buy from our stores or websites,
but also those who do not.
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