Best Buy 2006 Annual Report Download - page 7

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Best Buy 2006 Annual Report 5
5
enabled us to raise our earnings guidance. We finished the year with revenue growth
of 12 percent, to $30.8 billion; and growth in earnings from continuing operations
of 22 percent, to $1.1 billion. We returned $922 million to shareholders through stock
repurchases and dividends— nearly a three-fold increase over fiscal 2005. We also
contributed approximately $30 million to our store communities, including relief for
families and schools devastated by hurricanes Katrina, W ilma and Rita.
Success and earnings growth of this magnitude are exciting for any company, particu-
larly one our size. I strongly believe that our decision to accelerate customer centricity
contributed to our 22-percent increase in earnings from continuing operations this year.
Profitably Scaling Customer Centricity
We have an unshaken belief in the need to transform our company, and our trans-
formation has moved beyond the tipping point. We believe that the best way to boost
returns is to invest in our customers and employees. Accordingly, we have set six
priorities for fiscal 2007.
• One, we plan to implement a single, customer-centric operating model at all U.S.
Best Buy stores and the corporate campus by fiscal year end. Moving to a single
operating model will eliminate redundant work and put all of us on the same team.
Our intention is to combine the best of our original, highly disciplined operating
model with our more flexible, customer-centric model.
• Two, we plan to continue to grow organically. We expect to open approximately
90 new stores in North America. We also anticipate adding 200 more Magnolia
Home Theaters locations inside U.S. Best Buy stores, taking advantage of rising
consumer interest in flat-panel TVs.
• Three, we will build our small-business capabilities. This effort includes nearly
doubling our Best Buy For Business locations, to more than 200 stores, which will
train more than 900 Microsoft-certified professionals by fiscal year end.
• Four, we expect to grow our services business by driving productivity improvements
in computer services and home theater installation. We plan to drive the gains
through the implementation of new tools, the benefits of scale and a market-based
approach to home visits.
• Five, we plan to enhance our ability to provide complete solutions to customers.
We expect to do that by giving our stores better tools and capabilities for describ-
ing, demonstrating and selling solutions such as digital music subscriptions,
digital cable and voice-over-Internet telephony.
• Six, we plan to pursue an international growth strategy. We are beginning by
leveraging our supply chain and technology investments in Canada, where we
operate both Future Shop and Best Buy stores. We also are embarking on a
controlled growth strategy in China.
These priorities are aimed at profitably scaling the best ideas from last year, based
on what we have learned, as we build new, strategic capabilities supported by a
single operating model.
FY 06FY 05FY 04
36%36%36%
Source: Weekly online surveys
FY 06FY 05FY 04
4.14.1
4.0
Source: Gallup survey, using a 5-point scale
Customer Loyalty
We believe customer centricity helped us maintain
our customer loyalty (percentage of customers
rating us 5 on a 5-point scale). The highest loyalty
came from customers who used Geek Squad.
Employee Engagement
Best Buy’s growth strategy benefits from knowl-
edgeable and engaged employees. We are
investing in employees in order to deliver better
customer service.