Best Buy 2011 Annual Report Download - page 42

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• a change in the form of vendor funding for fiscal 2011, shifting more dollars to gross profit than SG&A; and
• improved attachment of services, particularly in the mobile computing product category;
• partially offset by declining average selling prices of televisions.
Our Domestic segment’s SG&A grew $348 million, or 5.0%, in fiscal 2011 compared to fiscal 2010. The increase in
SG&A was driven by the opening of new stores and an increase in the Best Buy Mobile profit share-based management
fee, partially offset by lower incentive compensation costs. The following factors collectively contributed to the Domestic
segment’s SG&A rate increase of 1.0% of revenue:
• deleverage due to the comparable store sales decline;
• continued growth in Best Buy Mobile (including the profit share-based management fee we paid to Best Buy
Europe, which is offset in the International segment SG&A results and, therefore, has no net impact on our
consolidated operating income); and
• the change in the form of vendor funding as discussed above;
• partially offset by lower incentive compensation costs.
The $40 million decrease in our Domestic segment’s operating income for fiscal 2011 was due to an increase in
restructuring charges, a modest decline in revenue, and higher SG&A spending, partially offset by increased gross profit
due to an improvement in the gross profit rate. Our Domestic segment’s operating income in fiscal 2011 included
$51 million of restructuring charges recorded in the fiscal fourth quarter, compared to $25 million of restructuring charges
recorded in fiscal 2010. The fiscal 2011 restructuring charges resulted from activities to improve efficiencies in our
Domestic segment, which resulted in charges for inventory write-downs, property and equipment impairments, employee
termination benefits and intangible asset impairments. The fiscal 2010 restructuring charges related primarily to updating
our U.S. Best Buy store operating model, which resulted in the elimination of certain positions for which we incurred
employee termination costs.
Fiscal 2010 Results Compared With Fiscal 2009
The 6.4% revenue increase in fiscal 2010 resulted primarily from the net addition of 85 new stores during fiscal 2010 and
a comparable store sales gain of 1.7%.
The components of the net revenue increase in the Domestic segment in fiscal 2010 were as follows:
Net new stores 4.7%
Comparable store sales impact 1.7%
Total revenue increase 6.4%
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