Best Buy 2016 Annual Report Download - page 38

Download and view the complete annual report

Please find page 38 of the 2016 Best Buy annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 116

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116

30
Results of Operations
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 Mexico operations, as well as our discontinued China and Europe operations, on a one-
month lag. Consistent with such consolidation, the financial and non-financial information presented in our MD&A relative to
these operations is also presented on a lag. Our policy is to accelerate the recording of events occurring in the lag period that
significantly affect our consolidated financial statements. There were no significant intervening events which would have
materially affected our financial condition, results of operations, liquidity or other factors had they been recorded during fiscal
2016.
Discontinued Operations Presentation
The results of mindSHIFT Technologies, Inc. ("mindSHIFT") in our Domestic segment and Best Buy Europe and Five Star in
our International segment are presented as discontinued operations in our Consolidated Statements of Earnings. Unless
otherwise stated, financial results discussed herein refer to continuing operations.
Domestic Segment Installment Billing Plans
In April 2014, we began to sell installment billing plans offered by mobile carriers to our customers to complement the more
traditional two-year plans. While the two types of contracts have broadly similar overall economics, installment billing plans
typically generate higher revenues due to higher proceeds for devices and higher cost of sales due to lower device subsidies. As
we increase our mix of installment billing plans, there is an associated increase in revenue and cost of goods sold and a
decrease in gross profit rate, with gross profit dollars relatively unaffected. This change in plan offer does not impact our
International segment.
The following table presents our Domestic and Enterprise comparable sales and the estimated benefit of installment billing for
fiscal 2016 and 2015:
January 30, 2016(1) January 31, 2015
Domestic
Comparable sales % gain 0.5 % 1.0%
Estimated benefit of installment billing 0.6 % 0.5%
Comparable sales % gain (decline) excluding estimated impact of installment billing (0.1)% 0.5%
Enterprise
Comparable sales % gain 0.5 % 0.5%
Estimated benefit of installment billing 0.6 % 0.5%
Comparable sales % gain (decline) excluding estimated impact of installment billing (0.1)% —%
(1) The Canadian brand consolidation, which included the permanent closure of 66 Future Shop stores, the conversion of 65 Future Shop stores to Best Buy
stores and the elimination of the Future Shop website, has a material impact on a year-over-year basis on the remaining Canadian retail stores and the
website. As such, all Canadian store and website revenue has been removed from the comparable sales base and the International segment no longer has a
comparable metric in fiscal 2016 and the Enterprise comparable sales equals the Domestic segment comparable sales. Enterprise comparable sales for
periods presented prior to fiscal 2016 include revenue from our International segment.
Consolidated Results
Fiscal 2016 Summary
• Fiscal 2016 included net earnings from continuing operations of $0.8 billion, compared to $1.2 billion in fiscal 2015. Net
earnings in fiscal 2016 included $201 million of restructuring charges, while fiscal 2015 included a $353 million discrete
tax benefit related to reorganizing certain European legal entities. Earnings per diluted share from continuing operations
was $2.30 in fiscal 2016, compared to $3.53 in fiscal 2015.
• Revenue was $39.5 billion in fiscal 2016 a decrease of $811 million compared to fiscal 2015. The decrease was driven by
the International segment and related to the negative impact of foreign currency exchange fluctuations and the negative
impact of Canadian store closures.