Best Buy 2008 Annual Report Download - page 64

Download and view the complete annual report

Please find page 64 of the 2008 Best Buy annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 120

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120

regarding future economic conditions. Differences in new-store openings and various store enhancement
actual economic conditions compared with our projects, including the costs of adding the Best Buy Mobile
assumptions could have a material impact on our fiscal experience to additional U.S. Best Buy stores. Specifically,
2009 results. Refer to Item 1A, Risk Factors, of this Annual the capital expenditures are expected to support the
Report on Form 10-K for additional important factors that opening of 85 to 100 new U.S. Best Buy stores; five to ten
could cause future results to differ materially from those Pacific Sales stores; six Canada Best Buy stores; five Future
contemplated by the following forward-looking statements. Shop stores; 20 to 25 Five Star stores; and five to eight
China Best Buy stores. We also anticipate opening test
As we consider the macroeconomic pressures on the stores in Mexico and Turkey within the next 12 to
consumer and evaluate the industry business trends, we 18 months. In addition, we expect to remodel and
believe it is prudent to plan for a soft consumer enhance certain existing stores. Capital expenditures in
environment in the near-term. Looking forward to fiscal fiscal 2009 also are expected to include approximately
2009, we are projecting annual earnings per diluted share $300 million in technology investments intended, among
(‘‘EPS’’) of $3.25 to $3.40, an average increase of 7% as other things, to improve our supply chain and customer
compared to fiscal 2008. We expect the EPS growth to be analytic capabilities, as well as increase our operating
driven primarily by a reduction in the weighted-average efficiencies and support domestic and international growth.
number of shares outstanding, a 9% increase in revenue
and an unchanged gross profit rate, partially offset by an During fiscal 2009, we plan to continue our quarterly cash
increase in our SG&A rate. We are projecting that our dividend program. We will continue to evaluate the
effective income tax rate for fiscal 2008 will be in the amount of our quarterly dividend based on our cash and
range of 37.5% to 38.0%. short-term investments position at the end of fiscal 2008,
and our expected cash flows to be generated during fiscal
Specifically, we are forecasting revenue of $43 to 2009.
$44 billion in fiscal 2008, compared with revenue of
$40.0 billion in fiscal 2008. We expect the net addition of We also expect to continue repurchasing our common
approximately 140 new stores will drive more than half of stock during fiscal 2009 pursuant to the $5.5 billion share
the revenue growth. For the fiscal year, we are projecting repurchase program authorized by our Board in June
an increase in comparable store sales of 1% to 3%. 2007, of which $2.5 billion remains available. For the
purpose of providing earnings guidance for fiscal 2009,
Our fiscal 2009 outlook assumes a decline in our we have assumed that we will repurchase $800 million of
operating income rate of 0.3% to 0.4% of revenue, our common stock. There is no stated expiration date
compared with fiscal 2008. The decline in our operating governing the period over which we can make our share
income rate is expected to be driven by an increase in our repurchases.
SG&A rate of 0.3% to 0.4% of revenue due to slower
revenue growth combined with continued investment in The actual amount of our fiscal 2009 capital expenditures,
strategic growth platforms such as Best Buy Mobile and share repurchases, and, if any, external investments, all of
international expansion. Further, we expect our gross profit which add unique capabilities or dimensions to our
rate to be unchanged year-over-year, driven primarily by businesses and support our growth strategy, can vary
mix benefits from revenue growth in mobile phones, significantly from planned levels depending on general
navigation devices and services to offset the negative mix economic conditions and the opportunities available to us.
impact from continued growth in notebook computers and We intend to update our annual earnings guidance if we
video gaming. are reasonably confident that annual results are expected
We do not provide a specific forecast for quarterly EPS. to change materially from our guidance.
Given the current environment, we expect that EPS growth
Item 7A. Quantitative and Qualitative
in the second half of the year will more than offset modest
Disclosures About Market Risk.
declines in the first half.
In addition to the risks inherent in our operations, we are
Capital expenditures in fiscal 2009 are expected to be
exposed to certain market risks, including adverse changes
approximately $1.1 billion. Of that total, we expect
in foreign currency exchange rates and interest rates.
approximately $750 million will support our planned
56