Best Buy 2011 Annual Report Download - page 40

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Segment Performance Summary
Domestic
The following table presents selected financial data for our Domestic segment for each of the past three fiscal years ($ in
millions):
Domestic Segment Performance Summary 2011(1) 2010(2) 2009(3)
Revenue $37,186 $37,314 $35,070
Revenue (decline) gain % (0.3)% 6.4% 5.2%
Comparable store sales % (decline) gain (3.0)% 1.7% (1.3)%
Gross profit as % of revenue 25.1% 24.2% 24.6%
SG&A as % of revenue 19.6% 18.6% 19.2%
Operating income $ 2,031 $ 2,071 $ 1,758
Operating income as % of revenue 5.5% 5.6% 5.0%
(1) Included within our Domestic segment’s operating income for fiscal 2011 is $51 million of restructuring charges recorded in the
fiscal fourth quarter related to measures we took to increase our efficiency. These charges resulted in a decrease in our Domestic
segment’s operating income of 0.1% of revenue for the fiscal year.
(2) Included within our Domestic segment’s operating income for fiscal 2010 is $25 million of restructuring charges recorded in the
fiscal first quarter related to measures we took to update our U.S. Best Buy store operating model. These charges resulted in a
decrease in our Domestic segment’s operating income of less than 0.1% of revenue for the fiscal year.
(3) Included within our Domestic segment’s operating income for fiscal 2009 is $72 million of restructuring charges recorded in the
fiscal fourth quarter related to measures we took to restructure our businesses. In addition, operating income is inclusive of goodwill
and tradename impairment charges of $66 million related to our former Speakeasy business. Collectively, these charges resulted in
a decrease in our Domestic segment’s operating income of 0.4% of revenue for the fiscal year.
The following table reconciles our Domestic segment stores open at the end of each of the last three fiscal years:
Fiscal 2009 Fiscal 2010 Fiscal 2011
Total Stores Total Stores Total Stores
at End of Stores Stores at End of Stores Stores at End of
Fiscal Year Opened Closed Fiscal Year Opened Closed Fiscal Year
Best Buy 1,023 46 — 1,069 31 (1) 1,099
Best Buy Mobile 38 36 — 74 103 — 177
Pacific Sales 34 1 — 35 — — 35
Magnolia Audio Video 6 — — 6 — — 6
Geek Squad 6 — — 6 — (6) —
Total Domestic segment stores 1,107 83 — 1,190 134 (7) 1,317
Fiscal 2011 Results Compared With Fiscal 2010
Our Domestic segment’s gross profit improved in fiscal 2011, as compared to fiscal 2010, with a continued rate
improvement partially offset by a revenue decline. These factors, combined with an increase in SG&A and restructuring
charges, led to a modest decline in operating income.
We believe the revenue decline resulted primarily from a combination of weakness in several key consumer electronics
industry product categories and a decline in our estimated domestic market share. Consumers continue to be highly
selective and cautious about how and when they make consumer electronics purchases. As a specialty retailer in the
consumer electronics industry, the adoption of new technology and the timing of product life-cycles continue to play an
important role in revenue trends. For example, the demand for new television technologies did not materialize as the
industry anticipated. Similarly, we saw a shift in consumer demand within mobile computing, as increased sales of tablets
resulted in a lower overall sales mix of notebook computers throughout fiscal 2011.
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