Best Buy 2008 Annual Report Download - page 42

Our SG&A rate in fiscal 2008 decreased by 0.3% of remainder of the revenue increase was due to the
revenue to 18.5% of revenue. The improvement was due favorable effect of fluctuations in foreign currency
primarily to the leveraging effect of the 11% growth in exchange rates, as well as income related to our
revenue and store operating model improvements. Our recognition of additional gift card breakage from prior
China operations, which carry a significantly lower SG&A years.
rate than our other operations, reduced our SG&A rate by Our comparable store sales gain in fiscal 2007 benefited
approximately 0.1% of revenue in fiscal 2008. from a higher average transaction amount driven by the
Because retailers do not uniformly record costs of continued growth in higher-ticket items, including
operating their supply chain between cost of goods sold flat-panel televisions and notebook computers. In addition,
and SG&A, our gross profit rate and SG&A rate may not comparable store sales were driven by continued customer
be comparable to other retailers’ corresponding rates. For demand for and the increased affordability of these
additional information regarding costs classified in cost of products, as strong unit volume growth was somewhat
goods sold and SG&A, refer to Note 1, Summary of muted by declines in average selling prices. Products
Significant Accounting Policies, of the Notes to having the largest impact on our fiscal 2007 comparable
Consolidated Financial Statements, included in Item 8, store sales gain included flat-panel televisions, notebook
Financials Statements and Supplementary Data, of this computers, video gaming hardware and software and MP3
Annual Report on Form 10-K. players and accessories. An increase in online purchases
also contributed to the fiscal 2007 comparable store sales
Fiscal 2007 Results Compared With Fiscal 2006 gain, as we continued to add features and capabilities to
our Web sites. Revenue from our online operations
Fiscal 2007 net earnings were nearly $1.4 billion, or $2.79 increased approximately 36% in fiscal 2007 and added to
per diluted share, compared with just over $1.1 billion, or the overall comparable store sales increase.
$2.27 per diluted share, in fiscal 2006. The increase was
driven by revenue growth and a decrease in our SG&A Our gross profit rate in fiscal 2007 decreased by 0.6% of
rate. These factors were partially offset by a decrease in revenue to 24.4% of revenue. The decrease was due
our gross profit rate and a higher effective income tax primarily to a lower-margin revenue mix, including
rate. Net earnings in fiscal 2007 also benefited from net increased revenue from notebook computers and video
interest income of $111 million, compared with net gaming hardware. Also contributing to the decrease, in
interest income of $77 million in fiscal 2006. order of impact, were a more promotional environment in
the consumer electronics and home office revenue
Revenue in fiscal 2007 increased 16% to $35.9 billion, categories, and the inclusion of our China operations for
compared with $30.8 billion in fiscal 2006. The increase a portion of the year. Our China operations, which carry a
resulted primarily from the net addition of 87 new Best Buy significantly lower gross profit rate than our other
and Future Shop stores during fiscal 2007, a full year of operations, reduced our gross profit rate in fiscal 2007 by
revenue from new stores added in fiscal 2006, a 5.0% approximately 0.2% of revenue.
comparable store sales gain, and the acquisitions of Five
Star and Pacific Sales. The remainder of the revenue Our SG&A rate in fiscal 2007 decreased by 0.9% of
increase was due primarily to the inclusion of an extra revenue to 18.8% of revenue. The decrease was due
week of business in fiscal 2007, the favorable effect of primarily to the leveraging effect of the 16% growth in
fluctuations in foreign currency exchange rates and income revenue and reduced performance-based incentive
related to our recognition of additional gift card breakage compensation. Also contributing to the decrease, in order
from prior years. The addition of new Best Buy and Future of impact, were controlled expenses related to our
Shop stores accounted for nearly four-tenths of the strategic initiatives and expense reduction efforts. Our
revenue increase in fiscal 2007; the comparable store China operations, which carry a significantly lower SG&A
sales gain accounted for three-tenths of the revenue rate than our other operations, reduced our SG&A rate by
increase; the acquisitions of Five Star and Pacific Sales approximately 0.1% of revenue in fiscal 2007. These
accounted for nearly two-tenths of the revenue increase; factors were partially offset by expenses related to
the inclusion of an extra week of business in fiscal 2007 increased asset impairments, litigation and business
accounted for one-tenth of the revenue increase; and the closure costs.
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