false000076447800007644782020-02-272020-02-27

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) February 27, 2020

Image - Image1.jpeg

BEST BUY CO., INC.

(Exact name of registrant as specified in its charter)

Minnesota

1-9595

41-0907483

(State or other jurisdiction

of incorporation)

(Commission

File Number)

(IRS Employer

Identification No.)

7601 Penn Avenue South

Richfield, Minnesota

55423

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code (612) 291-1000

N/A

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol

Name of exchange on which registered

Common Stock, $0.10 par value per share

BBY

New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company

If an emerging growth company, indicate by check mark if registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.



Item 2.02 Results of Operations and Financial Condition.

On February 27, 2020, Best Buy Co., Inc. (“Best Buy” or the “registrant”) issued a news release announcing its results of operations for the fourth quarter and year ended February 1, 2020.

The registrant is scheduled to conduct an earnings conference call at 8:00 a.m. Eastern Time (7:00 a.m. Central Time) on February 27, 2020. The earnings conference call is expected to be available live on the registrant’s website at www.investors.bestbuy.com.

The news release issued on February 27, 2020, is furnished as Exhibit 99 to this Current Report on Form 8-K and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability of that Section unless the registrant specifically incorporates it by reference in a document filed under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

The following are furnished as Exhibits to this Current Report on Form 8-K.

Exhibit No.

Description of Exhibit

99

News release issued February 27, 2020 (furnished pursuant to Item 2.02). Any internet address provided in this release is for information purposes only and is not intended to be a hyperlink. Accordingly, no information at any internet address is included herein.

104

Cover Page Interactive Data File (embedded within the Inline XBRL document).


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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

BEST BUY CO., INC.

(Registrant)

Date: February 27, 2020

By:

/s/ MATHEW R. WATSON

Mathew R. Watson

Senior Vice President, Finance – Controller and Chief Accounting Officer

 

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Best Buy Reports Better-Than-Expected Fourth Quarter Results

Enterprise Comparable Sales Increased 3.2%

GAAP Diluted EPS Increased 6% to $2.84

Non-GAAP Diluted EPS Increased 7% to $2.90

Announces FY21 Non-GAAP Diluted EPS Guidance of $6.10 to $6.30

Increases Quarterly Dividend 10% to $0.55 per Share



MINNEAPOLIS, February 27, 2020 -- Best Buy Co., Inc. (NYSE: BBY) today announced results for the 13-week fourth quarter ended February 1, 2020 (“Q4 FY20”), as compared to the 13-week fourth quarter ended February 2, 2019 (“Q4 FY19”).



 

 

 

 

 

 

 

 

 

 

 

 



Q4 FY20

Q4 FY19

FY20

FY19

Revenue ($ in millions)

 

 

 

 

 

 

 

 

 

 

 

 

Enterprise

$

15,196 

 

$

14,801 

 

$

43,638 

 

$

42,879 

 

Domestic segment

$

13,848 

 

$

13,497 

 

$

40,114 

 

$

39,304 

 

International segment

$

1,348 

 

$

1,304 

 

$

3,524 

 

$

3,575 

 

Enterprise comparable sales % change1

 

3.2 

%

 

3.0 

%

 

2.1 

%

 

4.8 

%

Domestic comparable sales % change1

 

3.4 

%

 

3.0 

%

 

2.3 

%

 

4.8 

%

Domestic comparable online sales % change1

 

18.7 

%

 

9.3 

%

 

17.0 

%

 

10.5 

%

International comparable sales % change1

 

1.6 

%

 

2.5 

%

 

(0.5)

%

 

4.6 

%

Operating Income

 

 

 

 

 

 

 

 

 

 

 

 

GAAP operating income as a % of revenue

 

6.4 

%

 

6.6 

%

 

4.6 

%

 

4.4 

%

Non-GAAP operating income as a % of revenue

 

6.5 

%

 

6.7 

%

 

4.9 

%

 

4.6 

%

Diluted Earnings per Share ("EPS")

 

 

 

 

 

 

 

 

 

 

 

 

GAAP diluted EPS

$

2.84 

 

$

2.69 

 

$

5.75 

 

$

5.20 

 

Non-GAAP diluted EPS

$

2.90 

 

$

2.72 

 

$

6.07 

 

$

5.32 

 



For GAAP to non-GAAP reconciliations of the measures referred to in the above table, please refer to the attached supporting schedule Reconciliation of Non-GAAP Financial Measures.



“We are posting our 12th straight quarter of comparable sales growth and showing our strength as a successful multi-channel retailer who can meet customers when and where they want,” said Corie Barry, Best Buy CEO. “We offered compelling holiday deals that resonated with customers and provided a seamless shopping experience, great inventory availability and fast and free delivery. Across online, home and stores, we are fulfilling our purpose to help enrich people’s lives through technology while also helping technology companies commercialize their product innovations.”



Best Buy CFO Matt Bilunas commented, “As we enter FY21, we are closely monitoring the developments related to the coronavirus outbreak. This is a very fluid situation, which makes it difficult to determine exact financial impacts from disruptions in supply chain. Based on what we know today, we have assumed the majority of the impacts occur in the first half of the year. Therefore, we view this as a relatively short-term disruption that does not impact our long-term strategy and initiatives. Our guidance ranges for both Q1 and the full year reflect our best estimates of the impacts at this time.”

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Bilunas continued, “For FY21, we expect to deliver full-year comparable sales growth in the range of flat to 2% while continuing to invest in those areas necessary to make strategic progress and deliver enhanced employee and customer experiences, as well as continuing to drive cost savings and efficiencies. We expect our gross profit rate to be approximately flat and our SG&A rate to be up slightly compared to FY20, resulting in a full-year non-GAAP operating income rate of approximately 4.8%. We are confident that our FY21 plan moves us along the path to achieve our FY25 targets, specifically the financial targets of $50 billion in revenue and a 5% non-GAAP operating income rate.”



FY21 Financial Guidance



Best Buy is providing the following full-year FY21 financial outlook:

·

Enterprise revenue of $43.3 billion to $44.3 billion

·

Enterprise comparable sales growth of flat to 2.0%

·

Enterprise non-GAAP operating income rate of approximately 4.8%2

·

Non-GAAP effective income tax rate of approximately 23.0%2

·

Non-GAAP diluted EPS of $6.10 to $6.302



Best Buy is providing the following Q1 FY21 financial outlook:

·

Enterprise revenue of $9.1 billion to $9.2 billion

·

Enterprise comparable sales growth of flat to 1.0%

·

Non-GAAP effective income tax rate of approximately 22.5%2

·

Diluted weighted average share count of approximately 260 million

·

Non-GAAP diluted EPS of $1.00 to $1.052



Domestic Segment Q4 FY20 Results



Domestic Revenue

Domestic revenue of $13.85 billion increased 2.6% versus last year. The increase was driven by comparable sales growth of 3.4%, partially offset by the loss of revenue from store closures in the past year.



The largest comparable sales growth drivers were headphones, computing, appliances, mobile phones and tablets. These drivers were partially offset by declines in the gaming category.



Domestic online revenue of $3.52 billion increased 18.7% on a comparable basis due to higher average order values, increased traffic and higher conversion rates. As a percentage of total Domestic revenue, online revenue increased approximately 350 basis points to 25.4% versus 21.9% last year.



Domestic Gross Profit Rate

Domestic gross profit rate was 21.2% versus 22.1% last year. The gross profit rate decrease of approximately 90 basis points was primarily driven by mix into lower-margin products, a lower gross profit rate in the services category and the impacts associated with tariffs on goods imported from China.



Domestic Selling, General and Administrative Expenses (“SG&A”)

Domestic GAAP SG&A was $2.05 billion, or 14.8% of revenue, versus $2.10 billion, or 15.6% of revenue, last year. On a non-GAAP basis, SG&A was $2.03 billion, or 14.7% of revenue, versus $2.08 billion, or 15.4% of revenue, last year. Both GAAP and non-GAAP SG&A decreased primarily due to lower incentive compensation expense, which was partially offset primarily by higher variable costs due to increased revenue and higher advertising expense. 



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International Segment Q4 FY20 Results



International Revenue

International revenue of $1.35 billion increased 3.4% versus last year. This increase was primarily driven by the impact of approximately 160 basis points of favorable foreign currency exchange rates and comparable sales growth of 1.6%, which was driven by Canada.  



International Gross Profit Rate

International gross profit rate was 22.6% versus 22.9% last year. The gross profit rate decrease of approximately 30 basis points was primarily due to Canada, which was largely driven by a by mix into lower-margin products.



International SG&A

International SG&A was $215 million, or 15.9% of revenue, versus $207 million, or 15.9% of revenue, last year. SG&A increased primarily due to the negative impact of foreign exchange rates and expense associated with new stores in Mexico opened in the past year.



Dividends and Share Repurchases



In Q4 FY20, the company returned a total of $436 million to shareholders through share repurchases of $307 million and dividends of $129 million. For the full year, the company returned a total of $1.53 billion to shareholders through share repurchases of $1.0 billion and dividends of $527 million. 



Today, the company announced its board of directors approved a 10% increase in the regular quarterly dividend to $0.55 per share, effective immediately. The regular quarterly dividend will be payable on April 9, 2020, to shareholders of record as of the close of business on March 19, 2020.



The company plans to spend between $750 million and $1.0 billion on share repurchases in FY21.



Conference Call



Best Buy is scheduled to conduct an earnings conference call at 8:00 a.m. Eastern Time (7:00 a.m. Central Time) on February  27, 2020. A webcast of the call is expected to be available at www.investors.bestbuy.com,  both live and after the call.



Notes:

(1) In Q1 FY20, the company refined its methodology for calculating comparable sales. It now reflects certain revenue streams previously excluded from the comparable sales calculation, such as credit card revenue, gift card breakage, commercial sales and sales of merchandise to wholesalers and dealers, as applicable. The impact of adopting these changes is immaterial to all periods presented, and therefore prior-period comparable sales disclosures have not been restated.



(2) A reconciliation of the projected non-GAAP operating income, non-GAAP effective income tax rate and non-GAAP diluted EPS, which are forward-looking non-GAAP financial measures, to the most directly comparable GAAP financial measures, is not provided because the company is unable to provide such reconciliation without unreasonable effort. The inability to provide a reconciliation is due to the uncertainty and inherent difficulty predicting the occurrence, the financial impact and the periods in which the non-GAAP adjustments may be recognized. These GAAP measures may include the impact of such items as restructuring charges; goodwill impairments; gains and losses on investments; intangible asset amortization; certain acquisition-related costs; and the tax effect of all such items. Historically, the company has excluded these items from non-GAAP financial measures. The company currently expects to continue to exclude these items in future disclosures of non-GAAP financial measures and may also exclude other items that may arise (collectively, “non-GAAP adjustments”). The decisions and events that typically lead to the recognition of non-GAAP adjustments, such as a decision to exit part of the business or reaching settlement of a legal dispute, are inherently unpredictable as to if or when they may

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occur. For the same reasons, the company is unable to address the probable significance of the unavailable information, which could be material to future results.



Forward-Looking and Cautionary Statements:

This earnings release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 as contained in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that reflect management’s current views and estimates regarding future market conditions, company performance and financial results, operational investments, business prospects, new strategies, the competitive environment and other events. You can identify these statements by the fact that they use words such as “anticipate,” “believe,” “assume,” “estimate,” “expect,” “intend,” “foresee,” “project,” “guidance,” “plan,” “outlook,” and other words and terms of similar meaning. These statements involve a number of risks and uncertainties that could cause actual results to differ materially from the potential results discussed in the forward-looking statements. Among the factors that could cause actual results and outcomes to differ materially from those contained in such forward-looking statements are the following: competition (including from multi-channel retailers, e-commerce business, technology service providers, traditional store-based retailers, vendors and mobile network carriers), our expansion strategies, our focus on services as a strategic priority, our reliance on key vendors and mobile network carriers, our ability to attract and retain qualified employees, changes in market compensation rates, risks arising from statutory, regulatory and legal developments, macroeconomic pressures in the markets in which we operate, failure to effectively manage our costs, our reliance on our information technology systems, our ability to prevent or effectively respond to a privacy or security breach, our ability to effectively manage strategic ventures, alliances or acquisitions, our dependence on cash flows and net earnings generated during the fourth fiscal quarter, susceptibility of our products to technological advancements, product life cycle preferences and changes in consumer preferences, economic or regulatory developments that might affect our ability to provide attractive promotional financing, interruptions and other supply chain issues, catastrophic events, health crises, pandemics, our ability to maintain positive brand perception and recognition, product safety and quality concerns, changes to labor or employment laws or regulations, our ability to effectively manage our real estate portfolio, constraints in the capital markets or our vendor credit terms, changes in our credit ratings, any material disruption in our relationship with or the services of third-party vendors, risks related to our exclusive brand products and risks associated with vendors that source products outside of the U.S., including trade restrictions or changes in the costs of imports (including existing or new tariffs or duties and changes in the amount of any such tariffs or duties) and risks arising from our international activities.



A further list and description of these risks, uncertainties and other matters can be found in the company’s annual report and other reports filed from time to time with the Securities and Exchange Commission (“SEC”), including, but not limited to, Best Buy’s Annual Report on Form 10-K filed with the SEC on March 28, 2019. Best Buy cautions that the foregoing list of important factors is not complete, and any forward-looking statements speak only as of the date they are made, and Best Buy assumes no obligation to update any forward-looking statement that it may make.





 



 

Investor Contact:

Media Contact:

Mollie O'Brien

Jeff Shelman

(612) 291-7735 or mollie.obrien@bestbuy.com

(612) 291-6114 or jeffrey.shelman@bestbuy.com



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BEST BUY CO., INC.

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

($ and shares in millions, except per share amounts)

(Unaudited and subject to reclassification)







 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



Three Months Ended

 

Twelve Months Ended



February 1, 2020

 

February 2, 2019

 

February 1, 2020

 

February 2, 2019

Revenue

$

15,196 

 

 

$

14,801 

 

 

$

43,638 

 

 

$

42,879 

 

Cost of sales

 

11,961 

 

 

 

11,518 

 

 

 

33,590 

 

 

 

32,918 

 

Gross profit

 

3,235 

 

 

 

3,283 

 

 

 

10,048 

 

 

 

9,961 

 

Gross profit %

 

21.3 

%

 

 

22.2 

%

 

 

23.0 

%

 

 

23.2 

%

Selling, general and administrative expenses

2,268 

 

 

 

2,306 

 

 

 

7,998 

 

 

 

8,015 

 

SG&A %

 

14.9 

%

 

 

15.6 

%

 

 

18.3 

%

 

 

18.7 

%

Restructuring charges

 

 -

 

 

 

(1)

 

 

 

41 

 

 

 

46 

 

Operating income

 

967 

 

 

 

978 

 

 

 

2,009 

 

 

 

1,900 

 

Operating income %

 

6.4 

%

 

 

6.6 

%

 

 

4.6 

%

 

 

4.4 

%

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain on sale of investments

 

 -

 

 

 

 -

 

 

 

 

 

 

12 

 

Investment income and other

 

14 

 

 

 

14 

 

 

 

47 

 

 

 

49 

 

Interest expense

 

(14)

 

 

 

(20)

 

 

 

(64)

 

 

 

(73)

 

Earnings before income tax expense

 

967 

 

 

 

972 

 

 

 

1,993 

 

 

 

1,888 

 

Income tax expense

 

222 

 

 

 

237 

 

 

 

452 

 

 

 

424 

 

Effective tax rate

 

22.9 

%

 

 

24.3 

%

 

 

22.7 

%

 

 

22.4 

%

Net earnings

$

745 

 

 

$

735 

 

 

$

1,541 

 

 

$

1,464 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

$

2.87 

 

 

$

2.73 

 

 

$

5.82 

 

 

$

5.30 

 

Diluted earnings per share

$

2.84 

 

 

$

2.69 

 

 

$

5.75 

 

 

$

5.20 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

259.7 

 

 

 

269.0 

 

 

 

264.9 

 

 

 

276.4 

 

Diluted

 

262.4 

 

 

 

273.4 

 

 

 

268.1 

 

 

 

281.4 

 

























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BEST BUY CO., INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

($ in millions)

(Unaudited and subject to reclassification)







 

 

 

 

 

 

 



 

 

 

 

 

 

 



February 1, 2020

 

February 2, 2019

Assets

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

Cash and cash equivalents

$

2,229 

 

 

$

1,980 

 

Receivables, net

 

1,149 

 

 

 

1,015 

 

Merchandise inventories

 

5,174 

 

 

 

5,409 

 

Other current assets

 

305 

 

 

 

466 

 

Total current assets

 

8,857 

 

 

 

8,870 

 

Property and equipment, net

 

2,328 

 

 

 

2,510 

 

Operating lease assets

 

2,709 

 

 

 

 -

 

Goodwill

 

984 

 

 

 

915 

 

Other assets

 

713 

 

 

 

606 

 

Total assets

$

15,591 

 

 

$

12,901 

 



 

 

 

 

 

 

 

Liabilities and equity

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

Accounts payable

$

5,288 

 

 

$

5,257 

 

Unredeemed gift card liabilities

 

281 

 

 

 

290 

 

Deferred revenue

 

501 

 

 

 

446 

 

Accrued compensation and related expenses

 

410 

 

 

 

482 

 

Accrued liabilities

 

906 

 

 

 

982 

 

Current portion of operating lease liabilities

 

660 

 

 

 

 -

 

Current portion of long-term debt

 

14 

 

 

 

56 

 

Total current liabilities

 

8,060 

 

 

 

7,513 

 

Long-term operating lease liabilities

 

2,138 

 

 

 

 -

 

Long-term liabilities

 

657 

 

 

 

750 

 

Long-term debt

 

1,257 

 

 

 

1,332 

 

Equity

 

3,479 

 

 

 

3,306 

 

Total liabilities and equity

$

15,591 

 

 

$

12,901 

 







6

 


 

 







BEST BUY CO., INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

($ in millions)

(Unaudited and subject to reclassification)





 

 

 

 

 

 

 



 

 

 

 

 

 

 



Twelve Months Ended



February 1, 2020

 

February 2, 2019

Operating activities

 

 

 

 

 

 

 

Net earnings

$

1,541 

 

 

$

1,464 

 

Adjustments to reconcile net earnings to total cash provided by operating activities

 

 

 

 

 

Depreciation and amortization

 

812 

 

 

 

770 

 

Restructuring charges

 

41 

 

 

 

46 

 

Stock-based compensation

 

143 

 

 

 

123 

 

Deferred income taxes

 

70 

 

 

 

10 

 

Other, net

 

21 

 

 

 

(25)

 

Changes in operating assets and liabilities, net of acquired assets and liabilities

 

 

 

 

 

Receivables

 

(131)

 

 

 

28 

 

Merchandise inventories

 

237 

 

 

 

(194)

 

Other assets

 

16 

 

 

 

(34)

 

Accounts payable

 

47 

 

 

 

432 

 

Income taxes

 

(132)

 

 

 

22 

 

Other liabilities

 

(100)

 

 

 

(234)

 

Total cash provided by operating activities

 

2,565 

 

 

 

2,408 

 



 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

 

 

Additions to property and equipment

 

(743)

 

 

 

(819)

 

Purchases of investments

 

(330)

 

 

 

 -

 

Sales of investments

 

322 

 

 

 

2,098 

 

Acquisitions, net of cash acquired

 

(145)

 

 

 

(787)

 

Other, net

 

 

 

 

16 

 

Total cash provided by (used in) investing activities

 

(895)

 

 

 

508 

 



 

 

 

 

 

 

 

Financing activities

 

 

 

 

 

 

 

Repurchase of common stock

 

(1,003)

 

 

 

(1,505)

 

Issuance of common stock

 

48 

 

 

 

38 

 

Dividends paid

 

(527)

 

 

 

(497)

 

Borrowings of debt

 

 -

 

 

 

498 

 

Repayments of debt

 

(15)

 

 

 

(546)

 

Other, net

 

(1)

 

 

 

(6)

 

Total cash used in financing activities

 

(1,498)

 

 

 

(2,018)

 



 

 

 

 

 

 

 

Effect of exchange rate changes on cash

 

(1)

 

 

 

(14)

 

Increase in cash, cash equivalents and restricted cash

 

171 

 

 

 

884 

 

Cash, cash equivalents and restricted cash at beginning of period

 

2,184 

 

 

 

1,300 

 

Cash, cash equivalents and restricted cash at end of period

$

2,355 

 

 

$

2,184 

 













7

 


 

 

BEST BUY CO., INC.

SEGMENT INFORMATION

($ in millions)

(Unaudited and subject to reclassification)







 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



Three Months Ended

 

Twelve Months Ended

Domestic Segment Results

February 1, 2020

 

February 2, 2019

 

February 1, 2020

 

February 2, 2019

Revenue

$

13,848 

 

 

$

13,497 

 

 

$

40,114 

 

 

$

39,304 

 

Comparable sales % change

 

3.4 

%

 

 

3.0 

%

 

 

2.3 

%

 

 

4.8 

%

Comparable online sales % change

 

18.7 

%

 

 

9.3 

%

 

 

17.0 

%

 

 

10.5 

%

Gross profit

$

2,931 

 

 

$

2,985 

 

 

$

9,234 

 

 

$

9,144 

 

Gross profit as a % of revenue

 

21.2 

%

 

 

22.1 

%

 

 

23.0 

%

 

 

23.3 

%

SG&A

$

2,053 

 

 

$

2,099 

 

 

$

7,286 

 

 

$

7,300 

 

SG&A as a % of revenue

 

14.8 

%

 

 

15.6 

%

 

 

18.2 

%

 

 

18.6 

%

Operating income

$

878 

 

 

$

886 

 

 

$

1,907 

 

 

$

1,797 

 

Operating income as a % of revenue

 

6.3 

%

 

 

6.6 

%

 

 

4.8 

%

 

 

4.6 

%



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Domestic Segment Non-GAAP Results1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

$

2,931 

 

 

$

2,985 

 

 

$

9,234 

 

 

$

9,144 

 

Gross profit as a % of revenue

 

21.2 

%

 

 

22.1 

%

 

 

23.0 

%

 

 

23.3 

%

SG&A

$

2,034 

 

 

$

2,082 

 

 

$

7,211 

 

 

$

7,259 

 

SG&A as a % of revenue

 

14.7 

%

 

 

15.4 

%

 

 

18.0 

%

 

 

18.5 

%

Operating income

$

897 

 

 

$

903 

 

 

$

2,023 

 

 

$

1,885 

 

Operating income as a % of revenue

 

6.5 

%

 

 

6.7 

%

 

 

5.0 

%

 

 

4.8 

%



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



Three Months Ended

 

Twelve Months Ended

International Segment Results

February 1, 2020

 

February 2, 2019

 

February 1, 2020

 

February 2, 2019

Revenue

$

1,348 

 

 

$

1,304 

 

 

$

3,524 

 

 

$

3,575 

 

Comparable sales % change

 

1.6 

%

 

 

2.5 

%

 

 

(0.5)

%

 

 

4.6 

%

Gross profit

$

304 

 

 

$

298 

 

 

$

814 

 

 

$

817 

 

Gross profit as a % of revenue

 

22.6 

%

 

 

22.9 

%

 

 

23.1 

%

 

 

22.9 

%

SG&A

$

215 

 

 

$

207 

 

 

$

712 

 

 

$

715 

 

SG&A as a % of revenue

 

15.9 

%

 

 

15.9 

%

 

 

20.2 

%

 

 

20.0 

%

Operating income

$

89 

 

 

$

92 

 

 

$

102 

 

 

$

103 

 

Operating income as a % of revenue

 

6.6 

%

 

 

7.1 

%

 

 

2.9 

%

 

 

2.9 

%



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

International Segment Non-GAAP Results1

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

$

304 

 

 

$

298 

 

 

$

814 

 

 

$

817 

 

Gross profit as a % of revenue

 

22.6 

%

 

 

22.9 

%

 

 

23.1 

%

 

 

22.9 

%

SG&A

$

215 

 

 

$

207 

 

 

$

712 

 

 

$

714 

 

SG&A as a % of revenue

 

15.9 

%

 

 

15.9 

%

 

 

20.2 

%

 

 

20.0 

%

Operating income

$

89 

 

 

$

91 

 

 

$

102 

 

 

$

103 

 

Operating income as a % of revenue

 

6.6 

%

 

 

7.0 

%

 

 

2.9 

%

 

 

2.9 

%





(1)For GAAP to non-GAAP reconciliations, please refer to the attached supporting schedule titled Reconciliation of Non-GAAP Financial Measures.

8

 


 

 

BEST BUY CO., INC.

REVENUE CATEGORY SUMMARY

(Unaudited and subject to reclassification)







 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 



Revenue Mix

 

Comparable Sales



Three Months Ended

 

Three Months Ended

Domestic Segment

February 1, 2020

 

February 2, 2019

 

February 1, 2020

 

February 2, 2019

Computing and Mobile Phones

42 

%

 

41 

%

 

6.8 

%

 

1.2 

%

Consumer Electronics

36 

%

 

36 

%

 

4.1 

%

 

2.9 

%

Appliances

10 

%

 

%

 

14.4 

%

 

8.5 

%

Entertainment

%

 

10 

%

 

(21.8)

%

 

2.7 

%

Services

%

 

%

 

(0.1)

%

 

13.7 

%

Other

 -

%

 

 -

%

 

N/A

 

 

N/A

 

Total

100 

%

 

100 

%

 

3.4 

%

 

3.0 

%



 

 

 

 

 

 

 

 

 

 

 



Revenue Mix

 

Comparable Sales



Three Months Ended

 

Three Months Ended

International Segment

February 1, 2020

 

February 2, 2019

 

February 1, 2020

 

February 2, 2019

Computing and Mobile Phones

42 

%

 

41 

%

 

7.3 

%

 

1.2 

%

Consumer Electronics

37 

%

 

35 

%

 

1.2 

%

 

1.2 

%

Appliances

%

 

%

 

(3.5)

%

 

8.6 

%

Entertainment

%

 

%

 

(16.9)

%

 

(2.5)

%

Services

%

 

%

 

8.5 

%

 

20.0 

%

Other

%

 

%

 

(16.1)

%

 

29.6 

%

Total

100 

%

 

100 

%

 

1.6 

%

 

2.5 

%



9

 


 

 



BEST BUY CO., INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

($ in millions, except per share amounts)

(Unaudited and subject to reclassification)



The following information provides reconciliations of the most comparable financial measures presented in accordance with accounting principles generally accepted in the U.S. (GAAP financial measures) to presented non-GAAP financial measures. The company believes that non-GAAP financial measures, when reviewed in conjunction with GAAP financial measures, can provide more information to assist investors in evaluating current period performance and in assessing future performance. For these reasons, internal management reporting also includes non-GAAP financial measures. Generally, presented non-GAAP financial measures include adjustments for items such as restructuring charges, goodwill impairments, gains and losses on investments, intangible asset amortization, certain acquisition-related costs and the tax effect of all such items. In addition, certain other items may be excluded from non-GAAP financial measures when the company believes this provides greater clarity to management and investors. These non-GAAP financial measures should be considered in addition to, and not superior to or as a substitute for, the GAAP financial measures presented in this earnings release and the company’s financial statements and other publicly filed reports. Non-GAAP financial measures as presented herein may not be comparable to similarly titled measures used by other companies.







 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



Three Months Ended

 

Three Months Ended



February 1, 2020

 

February 2, 2019



Domestic

 

International

 

Consolidated

 

Domestic

 

International

 

Consolidated

SG&A

$

2,053 

 

 

$

215 

 

 

$

2,268 

 

 

$

2,099 

 

 

$

207 

 

 

$

2,306 

 

% of revenue

 

14.8 

%

 

 

15.9 

%

 

 

14.9 

%

 

 

15.6 

%

 

 

15.9 

%

 

 

15.6 

%

Intangible asset amortization1

 

(19)

 

 

 

 -

 

 

 

(19)

 

 

 

(17)

 

 

 

 -

 

 

 

(17)

 

Non-GAAP SG&A

$

2,034 

 

 

$

215 

 

 

$

2,249 

 

 

$

2,082 

 

 

$

207 

 

 

$

2,289 

 

% of revenue

 

14.7 

%

 

 

15.9 

%

 

 

14.8 

%

 

 

15.4 

%

 

 

15.9 

%

 

 

15.5 

%



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

$

878 

 

 

$

89 

 

 

$

967 

 

 

$

886 

 

 

$

92 

 

 

$

978 

 

% of revenue

 

6.3 

%

 

 

6.6 

%

 

 

6.4 

%

 

 

6.6 

%

 

 

7.1 

%

 

 

6.6 

%

Intangible asset amortization1

 

19 

 

 

 

 -

 

 

 

19 

 

 

 

17 

 

 

 

 -

 

 

 

17 

 

Restructuring charges2

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

(1)

 

 

 

(1)

 

Non-GAAP operating income

$

897 

 

 

$

89 

 

 

$

986 

 

 

$

903 

 

 

$

91 

 

 

$

994 

 

% of revenue

 

6.5 

%

 

 

6.6 

%

 

 

6.5 

%

 

 

6.7 

%

 

 

7.0 

%

 

 

6.7 

%



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effective tax rate

 

 

 

 

 

 

 

 

 

22.9 

%

 

 

 

 

 

 

 

 

 

 

24.3 

%

Tax reform - repatriation tax3

 

 

 

 

 

 

 

 

 

 -

%

 

 

 

 

 

 

 

 

 

 

0.2 

%

Tax reform - deferred tax rate change3

 

 

 

 

 

 

 

 

 

 -

%

 

 

 

 

 

 

 

 

 

 

0.1 

%

Non-GAAP effective tax rate

 

 

 

 

 

 

 

 

 

22.9 

%

 

 

 

 

 

 

 

 

 

 

24.6 

%





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



Three Months Ended

 

Three Months Ended



February 1, 2020

 

February 2, 2019



Pretax Earnings

 

Net of Tax4

 

Per Share

 

Pretax Earnings

 

Net of Tax4

 

Per Share

GAAP diluted EPS

 

 

 

 

 

 

 

 

$

2.84 

 

 

 

 

 

 

 

 

 

 

$

2.69 

 

Intangible asset amortization1

$

19 

 

 

$

14 

 

 

 

0.06 

 

 

$

17 

 

 

$

13 

 

 

 

0.05 

 

Restructuring charges2

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

(1)

 

 

 

(1)

 

 

 

(0.01)

 

Acquisition-related transaction costs1

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 

 

 

 -

 

Tax reform - repatriation tax3

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

(2)

 

 

 

(0.01)

 

Non-GAAP diluted EPS

 

 

 

 

 

 

 

 

$

2.90