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Best Buy 05 Annual Report 7
Third, we will work to boost employee retention. This effort
will draw on insights from our customer centricity stores,
which have higher retention than our other stores, and our
strengths-based approach to management.
Fourth, we will add individualized marketing capabilities to
our skills in mass marketing, as certain customer segments
do not rely on the mass media for their information.
Fifth, we will simplify our internal processes so that they can
adapt to changing customer needs.
Clearly, these five goals are linked. We expect higher returns
if knowledgeable and experienced employees deliver inno-
vative products and services that suit changing lifestyles
and reach new customers through individualized marketing
programs … all supported by more agile supply chain and
technology systems.
Increasing Our Operating Income Rate
We believe this work supports our corporate goal of achiev-
ing a 7-percent operating income rate in the next three
years. We have set this aggressive profit goal to stimulate
thinking and innovation in the business. Our roadmap
to the 7-percent goal has four components: the organic
growth fueled by our transformation to customer centricity,
including the expansion of our services business; better
supply chain management and merchandising; the reduc-
tion of our total cost of ownership in information technol-
ogy; and expansion of the operating income rate of our
stores in Canada.
Focusing Our Executive Team
Last year, we reorganized our resources to support our
long-term growth, a change that resulted in a smaller,
more focused executive team. As part of the reorganization,
we announced that Al Lenzmeier plans to retire at the end
of fiscal 2006. Al joined Best Buy’s Finance Department in
1984, advanced to CFO in 1991 and assumed the role
of president and chief operating officer in 2002. Since Al’s
retirement will precede next year’s annual report, I would
like to take the opportunity to thank Al for partnering with
me for the past 21 years. Al’s business acumen, leadership
and integrity have earned him the respect of all who deal
with him.
I also would like to acknowledge the hard work of our
employees and the support of our vendors and shareholders.
This transformation would not be possible without you.
This year will be pivotal for our company and its future.
While I am mindful of the challenges and risks inherent
to this undertaking, I am confident of our success because
I have had the good fortune of seeing first-hand the talent
inside our organization. Our employees have a greater
capacity to learn and innovate than we have ever had
before in my 32 years with the company. I am honored
to be leading Best Buy through this transformation, and
I look forward to updating you on our progress.
Bradbury H. Anderson
Vice Chairman and CEO
FY 02FY 01FY 00 FY 05FY 04FY 03
Total Shareholder Return
Best Buy Co., Inc. S&P 500 S&P Retailing Group Industry Index
$100.00
$163.96
$139.66
$95.18
Our five-year total shareholder return, including stock price appreciation and dividends,
continued to outperform the S&P 500 and its index of retailers.
Source: Research Data Group, Inc.