Best Buy 2013 Annual Report Download - page 41

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41
The following table presents the International segment's revenue mix percentages and comparable store sales percentage
changes by revenue category in fiscal 2013 (11-month) and 2012 (11-month recast):
Revenue Mix Summary Comparable Store Sales Summary
11 Months Ended 11 Months Ended
February 2, 2013 January 28, 2012 February 2, 2013 January 28, 2012
Consumer Electronics 18% 20% (16.5)% (7.0)%
Computing and Mobile Phones 61% 56% 0.1 % (0.3)%
Entertainment 4% 5% (17.4)% (13.4)%
Appliances 10% 10% (15.1)% 2.9 %
Services 7% 9% (6.9)% (1.3)%
Other <1% <1% n/a n/a
Total 100% 100% (6.9)% (2.5)%
The following is a description of the notable comparable store sales changes in our International segment by revenue category:
• Consumer Electronics: The 16.5% comparable store sales decline was driven primarily by decreases in the sales of
televisions and digital imaging products, primarily in Canada, as a result of industry softness and device convergence
similar to that experienced within our Domestic segment.
• Computing and Mobile Phones: The 0.1% comparable store sales gain was caused primarily from an increase in
sales of mobile phones in Europe and Canada, as well as increased tablet sales in Canada. These gains were almost
fully offset by a decline in sales of notebooks and desktop computers.
• Entertainment: The 17.4% comparable store sales decline was primarily from decreases in gaming in Canada as a
result of factors similar to those experienced in our Domestic segment.
• Appliances: The 15.1% comparable store sales decline was primarily due to a decrease in sales of appliances in our
Five Star operations due to a slowdown in the housing market and the end of certain government stimulus programs in
China in December 2011.
• Services: The 6.9% comparable store sales decline was primarily due to a decrease in services in Canada and Europe.
Our International segment experienced a gross profit decline of $309 million, or 9.9%, in fiscal 2013 (11-month), driven
primarily by revenue declines in Canada and China and a gross profit rate decline in Europe. The 2.2% of revenue decrease in
the gross profit rate was driven by Europe due to a higher percentage of revenue coming from the wholesale channel, an
unfavorable product mix, and greater promotional activity.
Our International segment's SG&A increased $46 million, or 1.7%, in fiscal 2013 (11-month). The increase in both SG&A and
the SG&A rate was driven by the absence of the Best Buy Mobile profit share-based management fee, partially offset by lower
spending in Europe. In addition, the deleveraging impact of negative comparable store sales in Five Star and Canada also
contributed to the SG&A rate increase.
Our International segment recorded $123 million and $15 million of restructuring charges in fiscal 2013 (11-month) and 2012
(11-month recast), respectively. The restructuring charges in fiscal 2013 (11-month) related to our Renew Blue and fiscal 2013
Europe restructuring activities and consisted of facility closure costs, employee termination benefits and property and
equipment impairments. The fiscal 2012 (11-month recast) charges related to our fiscal 2012 restructuring and consisted of
property and equipment impairments. These restructuring charges resulted in a decrease in our operating income in fiscal 2013
(11-month) and 2012 (11-month recast) of 1.0% of revenue and 0.1% of revenue, respectively. Refer to Note 7, Restructuring
Charges, of the Notes to Consolidated Financial Statements, included in Item 8, Financial Statements and Supplementary Data,
of this Transition Report on Form 10-K for further information about the restructuring activities.
During the fourth quarter of fiscal 2013 (11-month), we recorded a $819 million goodwill impairment charge related to our
Best Buy Canada and Five Star reporting units. The impairments followed significant deterioration in operating performance in
the latter part of fiscal 2013 (11-month), with results falling significantly below management forecasts. As a result of this
decline in performance, during the fourth quarter of fiscal 2013 (11-month), management updated long-range forecasts for the
two reporting units. This analysis led to the conclusion that the goodwill had no value, and therefore full impairments were
recorded. Refer to Note 1, Summary of Significant Accounting Policies, of the Notes to Consolidated Financial Statements,
included in Item 8, Financial Statements and Supplementary Data, of this Transition Report on Form 10-K for further
information about the goodwill impairment.
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