Best Buy 2001 Annual Report Download - page 25

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Best Buy Co., Inc.
26
Consumer Electronics Consumer electronics comprised 33% of Best Buy’s total sales mix in fiscal 2001, up from 30% in fiscal
2000. The category experienced double-digit comparable store sales growth, led by new technology products, including digital
televisions, digital camcorders, cameras and DVD players. The sales were driven by increased consumer demand for new technology
and lower price points. Sales of digital televisions, with an average selling price of approximately $2,300 as of fiscal year-end,
increased dramatically during the year, accounting for approximately 10% of fiscal 2001 television sales compared with 2% in
fiscal 2000. Consumers continued the rapid transition to DVD technology from the VHS format. Sales of analog televisions and
home theater systems also generated strong sales gains in fiscal 2001.
Entertainment Softw are Sales of entertainment software, which includes music and movies, computer software and video
games, were 19% of Best Buy’s total sales in fiscal 2001, unchanged from fiscal 2000. Best Buy posted its third consecutive year
of DVD movie comparable store sales gains of more than 100% due to the continued expansion of the DVD hardware installed
base and a broader assortment of movie titles, including strong-selling new releases. Sales of recorded music were impacted by
the general absence of new releases with strong consumer appeal and an increase in both the downloading of music via Internet
sites and greater consumer awareness of CD recording technology. Video game hardware and software sales were weaker than
expected due to a shortage of new titles and the limited availability of new technology products such as Sony’s PlayStation II video
game platform. O nline offerings, industry consolidation, the industry-wide decrease in personal computer unit sales volume and
lower price points continued to impact computer software sales.
Appliances Comparable store sales of appliances declined in fiscal 2001 as a result of an increased number of competing retail
stores offering major appliances, a lack of new products and the slowdown in consumer demand that was experienced throughout
the industry. Currently, the Company is working with suppliers to improve its appliance business model, end to end, and increase
profitability. The primary areas of concentration include the consumer shopping experience, marketing of products, after-sale service
and logistics.
Other Sales in the “other” category, comprised of Performance Service Plans (PSPs), furniture and other miscellaneous products
such as batteries, business cases and blank audio and video media, were consistent with fiscal 2000 as a percentage of the retail
store sales mix. PSP sales decreased to 3.9% of revenues in fiscal 2001 from 4.0% of revenues in fiscal 2000 due to the decline
in personal computer and appliance unit volume, which was offset by higher unit sales of other products.
MD&A