Best Buy 2007 Annual Report Download - page 50

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PART II
A 3.0% comparable store sales gain in our Domestic
segment’s entertainment software product group was due
primarily to sales growth in video gaming, driven by the
increased affordability of existing platforms, as well as the
launches of Sony Playstation 3 and Nintendo Wii. The
comparable store sales gains were partially offset by
continued softness in sales of new music and movie
releases.
Our Domestic segment’s home-office product group
recorded a 0.5% comparable store sales decrease in fiscal
2007, driven primarily by declines in desktop computers
and printers. The comparable store sales declines were
partially offset by growth in notebook computers, reflecting
continued consumer demand for portable technology.
A 2.1% comparable store sales decline in our Domestic
segment’s appliances product group was driven primarily by
declines in sales of small appliances. Comparable store
sales of major appliances were flat in fiscal 2007, as
benefits from the expansion of our improved appliance
assortments were offset by a softer housing market.
Our Domestic segment’s gross profit rate in fiscal 2007
decreased by 0.5% of revenue to 24.8% of revenue. The
decrease was due primarily to a lower-margin revenue mix,
including increased revenue from notebook computers and
video gaming hardware. Also contributing to the decrease
was a more promotional environment in the consumer
electronics and home-office product groups.
Our Domestic segment’s SG&A rate in fiscal 2007
decreased by 0.7% of revenue to 18.8% of revenue. The
decrease was due primarily to the leveraging effect of the
13% growth in revenue and reduced performance-based
incentive compensation. Also contributing to the decrease,
in order of impact, were controlled expenses related to our
strategic initiatives and expense reduction efforts. These
factors were partially offset by expenses related to increased
asset impairments, litigation and business closure costs.
The following table reconciles Domestic stores open at the beginning and end of fiscal 2007:
Total
Stores at
End of
Fiscal 2006 Stores
Opened Stores Acquired Stores Closed
Total
Stores at
End of
Fiscal 2007
U.S. Best Buy 742 80 — — 822
Magnolia Audio Video 20 — — — 20
Pacific Sales — — 14 — 14
U.S. Geek Squad 12 — — — 12
Total Domestic stores 774 80 14 — 868
Note: During fiscal 2007, we relocated 13 U.S. Best Buy stores. No other stores in the Domestic segment were relocated during fiscal 2007.
At the end of fiscal 2007, we operated 822 U.S. Best Buy stores in 49 states and the District of Columbia; 20 Magnolia Audio Video stores
in California, Washington and Oregon; 14 Pacific Sales stores in California; and 12 U.S. Geek Squad stores in Georgia, Texas, California,
Minnesota, Colorado and Wisconsin.
The following table reconciles Domestic stores open at the beginning and end of fiscal 2006:
Total
Stores at
End of
Fiscal 2005 Stores Opened Stores Acquired Stores Closed
Total
Stores at
End of
Fiscal 2006
U.S. Best Buy 668 74 — — 742
Magnolia Audio Video 20 — — — 20
U.S. Geek Squad 6 7 — 1 12
Total Domestic stores 694 81 — 1 774
Note: During fiscal 2006, we relocated 10 U.S. Best Buy stores. No other stores in the Domestic segment were relocated during fiscal 2006.
At the end of fiscal 2006, we operated 742 U.S. Best Buy stores in 49 states and the District of Columbia; 20 Magnolia Audio Video stores
in California, Washington and Oregon; and 12 U.S. Geek Squad stores in Georgia, Texas, California, Minnesota, Colorado and
Wisconsin.