Best Buy 2001 Annual Report Download - page 24

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Management’s Discussion and Analysis of Results
of Operations and Financial Condition
Best Buy Co., Inc.
25
Product Category Performance
The following table presents the Best Buy retail store sales mix by major product category for each of the past three fiscal years.
2001 2000* 1999*
Home O ffice 34% 35% 36%
Consumer Electronics – Video 22% 19% 18%
Consumer Electronics – Audio 11% 11% 11%
Entertainment Software 19% 19% 20%
Appliances 7% 8% 8%
O ther 7% 8% 7%
Total 1 00% 100% 10 0%
* Prior-year percentages have been adjusted to reflect current year categorization of products. The primary change was to
reclassify cameras and photographic equipment from the “other” category to consumer electronics – video.
Home Office Best Buy’s home office category experienced positive comparable store sales growth in 2001 as a whole; however,
sales slowed through the latter half of the year as consumer demand for personal computers declined. Revenues were driven by a
variety of products, including wireless communications, computer peripherals, configure-to-order computer offerings, notebook computers
and personal digital assistants (PDAs). ISPs continued to offer new subscribers significant rebates on the purchase of personal
computers and other products, stimulating demand. As a result of its strategic alliance with M icrosoft Corporation and Best Buy’s
retail execution, the Company signed up more than 1.3 million new ISP subscriptions in fiscal 2001, which had a favorable impact
on computer sales and other product sales. Laptop computers and configure-to-order computers, which generally carry a higher
gross profit margin, increased in their percentage of the computer business’ sales mix. Consumer demand has been shifting to
higher-priced, more fully featured computers. Desktop personal computer sales declined as a result of the industry-wide decline in
unit sales volume and a slight decrease in average selling prices. Computer peripherals, including CD drives with read/ write
capabilities, generated strong sales gains during the year. Sales of PDAs increased significantly in fiscal 2001 and contributed to
the category’s positive comparable store sales growth. The re-merchandising of wireless communications and other digital products
within this category to a more prominent position at the front of the stores contributed to the comparable store sales increase.
MD&A