Best Buy 2007 Annual Report Download - page 20

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5
PART I
PART I
Item 1. Business.
Description of Business
Best Buy Co., Inc. (“Best Buy,” “we,” “us,” or “our”) is a
specialty retailer of consumer electronics, home-office
products, entertainment software, appliances and related
services. We operate retail stores and Web sites under the
brand names Best Buy (BestBuy.com, BestBuyCanada.ca
and BestBuy.com.cn), Five Star (Five-Star.cn), Future Shop
(FutureShop.ca), Geek Squad (GeekSquad.com and
GeekSquad.ca), Magnolia Audio Video (MagnoliaAV.com)
and Pacific Sales Kitchen and Bath Centers
(PacificSales.com). References to our Web site addresses do
not constitute incorporation by reference of the information
contained on the Web sites.
Our vision is to make life fun and easy for consumers. Our
business strategy is to treat customers as unique individuals,
meeting their needs with end-to-end solutions, and
engaging and energizing our employees to serve them,
while maximizing overall profitability. We believe we offer
consumers meaningful advantages in store environment,
product value, product selection, and a variety of in-store
and in-home services related to the merchandise we offer,
all of which advance our objectives of enhancing our
business model, gaining market share and improving
profitability.
Information About Our Segments
During fiscal 2007, we operated two reportable segments:
Domestic and International. The Domestic segment is
comprised of all U.S. store and online operations, including
Best Buy, Geek Squad, Magnolia Audio Video and Pacific
Sales Kitchen and Bath Centers (“Pacific Sales”). We
acquired Pacific Sales in the first quarter of fiscal 2007.
U.S. Best Buy stores offer a wide variety of consumer
electronics, home-office products, entertainment software,
appliances and related services. Geek Squad provides
residential and commercial computer repair, support and
installation services. Magnolia Audio Video stores offer
high-end audio and video products and related services.
Pacific Sales stores offer high-end home-improvement
products, appliances and related services. The International
segment is comprised of all Canada store and online
operations, including Best Buy, Future Shop and Geek
Squad, as well as all China store and online operations,
including Best Buy, Geek Squad and Jiangsu Five Star
Appliance Co. (“Five Star”). We acquired a 75% interest in
Five Star in the second quarter of fiscal 2007. We opened
our first China Best Buy store in Shanghai in the fourth
quarter of fiscal 2007. Our International segment offers
products and services similar to our Domestic segment’s
offerings. However, Canada Best Buy stores do not carry
appliances. Further, Five Star stores and our China Best Buy
store do not carry entertainment software.
Financial information about our segments is included in
Item 7, Management’s Discussion and Analysis of Financial
Condition and Results of Operations, and Note 11,
Segment and Geographic Information, of the Notes to
Consolidated Financial Statements, included in Item 8,
Financial Statements and Supplementary Data, of this
Annual Report on Form 10-K.
Domestic Segment
We were incorporated in the state of Minnesota in 1966 as
Sound of Music, Inc. We began as an audio components
retailer and, with the introduction of the videocassette
recorder in the early 1980s, expanded into video products.
In 1983, we changed our name to Best Buy Co., Inc. and
began using mass-merchandising techniques, which
included offering a wider variety of products and operating
stores under a “superstore” concept. In 1989, we
dramatically changed our method of retailing by
introducing a self-service, noncommissioned, discount-style
store concept designed to give the customer more control
over the purchasing process.
In fiscal 2000, we established our first online shopping site,
BestBuy.com. Our “clicks-and-mortar” strategy is designed
to empower consumers to research and purchase products
seamlessly, either online or in our retail stores. The
BestBuy.com online shopping site offers expanded
assortments in all of our principal product groups.
In fiscal 2001, we acquired Magnolia Hi-Fi, Inc. — a
Seattle-based, high-end retailer of audio and video
products and services — to access an upscale customer
segment. During fiscal 2004, Magnolia Hi-Fi began doing
business as Magnolia Audio Video.
In fiscal 2003, we acquired Geek Squad. Geek Squad
provides residential and commercial computer repair,
support and installation services. We acquired Geek Squad
to further our plans of providing technology support services
to customers. Geek Squad service is available in all U.S.
Best Buy stores, as well as in 12 stand-alone stores, with
more than 10,000 agents. Our goal is to build Geek
Squad into North America’s largest provider of residential
and commercial computer repair, support and installation