Best Buy 2014 Annual Report Download - page 31

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removing the after-tax impact of operating income adjustments and the gain on sale of investments, as well as the tax impact of
the Best Buy Europe sale from our calculation of net earnings from continuing operations. To measure adjusted diluted
earnings per share from continuing operations, we excluded the per share impact of net earnings adjustments from our
calculation of diluted earnings per share. Management believes our adjusted debt to EBITDAR ratio is an important indicator
of our creditworthiness. Because non-GAAP financial measures are not standardized, it may not be possible to compare these
financial measures with other companies' non-GAAP financial measures having the same or similar names. These non-GAAP
financial measures are an additional way of viewing aspects of our operations that, when viewed with our GAAP results and the
reconciliations to corresponding GAAP financial measures within our discussion of consolidated performance below, provide a
more complete understanding of our business. We strongly encourage investors and shareholders to review our financial
statements and publicly-filed reports in their entirety and not to rely on any single financial measure.
Business Strategy
In the fall of 2012, we laid out for investors the state of our business and summarized the challenges we faced by articulating
two fundamental problems: (1) declining comparable store sales and (2) shrinking margins. To address these problems and
achieve our goal of becoming the leading authority and destination for technology products and services, we revealed our
Renew Blue transformation effort. That effort has five pillars and they are:
• Reinvigorate and rejuvenate the customer experience
• Attract and inspire leaders and employees
• Work with vendor partners to innovate and drive value
• Increase our return on invested capital
• Continue our leadership role in positively impacting our world
This past year was the first full fiscal year in our Renew Blue transformation. While we remain in the early stages of our
journey, we are pleased to report significant progress. Most notably, we stabilized our revenue and achieved virtually flat
Domestic segment comparable store sales, we increased our Domestic online revenue by nearly 20 percent, we increased our
Net Promoter Score by 300 basis points and, in one year, we exceeded our multi-year Renew Blue cost reduction target of $725
million.
Beyond these successes, we made additional operational improvements that included: increased price competitiveness; a ship-
from-store ability now in place in more than 1,400 locations; the opening of 1,400 Samsung and 600 Windows stores-within-a-
store and the completion of the first phase of our floor space optimization; the re-launch of our loyalty and credit card
programs; and the strengthening of our balance sheet through a renewed focus on our core business and a substantially more
disciplined capital allocation process.
Renew Blue Road Map for the Next 24 Months
Looking ahead, we remain focused on stabilizing and improving our comparable store sales and increasing profitability. To aid
in this focus, we have created a road map for the next 24 months of our transformation. This road map is grounded in our belief
that we need to do three things over the upcoming fiscal year and next. We must improve operational performance, build
foundational capabilities necessary to unlock future growth and make full use of our unique assets to create significant
differentiation for our customers and vendors. With this mind, our road map is built around eight priorities:
Merchandising. Our goal is to create a compelling assortment online and in the stores with a superior end-to-end customer
experience that yields enhanced financial returns. Our priorities in merchandising over the next 24 months include the
following: (1) developing compelling and differentiated strategies for key categories that leverage our competitive assets; (2)
strengthening vendor partnerships; (3) implementing an enhanced online shopping experience for key categories; (4) expanding
Pacific Kitchen and Home and Magnolia Design Centers stores-within-a-store; and (5) optimizing returns, replacement and
damages through operational improvements like ship-from-store.
Marketing. Our goal is to unlock growth opportunities by creating and effectively communicating new, compelling value
propositions for customers that go beyond price. Our priorities in marketing over the next 24 months include developing more
targeted, relevant and personalized customer communications in support of category strategies, as well as creating greater
engagement with customers through our loyalty program and our credit card offering.
Online. Our goal is to continue to capture online market share and serve customers based on how, where, and when they want
to be served. Our online priorities over the next 24 months include further improving the online shopping experience to make it
easier for customers to find and choose products, encouraging customers to complete their technology solutions by improving