Best Buy 2016 Annual Report Download - page 22

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• the potential for unexpected costs related to compliance with new or existing environmental legislation or international
agreements affecting energy, carbon emissions, electronics recycling and water or product materials;
• ensuring compliance with applicable product compliance laws and regulations with respect to both the products we
sell and contract to manufacture, including laws and regulation related to product safety and product transport;
• the impact of new regulations governing data privacy and security, whether imposed as a result of increased cyber-
security risks or otherwise;
• the impact of other new or changing statutes and regulations including, but not limited to, financial reform, National
Labor Relations Board rule changes, health care reform, corporate governance matters, escheatment rules and/or other
as yet unknown legislation, that could affect how we operate and execute our strategies as well as alter our expense
structure;
• the impact of changes in global tax laws (or interpretations thereof by courts and taxing authorities) and accounting
standards; and
• the impact of litigation trends, including class action lawsuits involving consumers and shareholders, and labor and
employment matters.
Regulatory activity focused on the retail industry has grown in recent years, increasing the risk of fines and additional operating
costs associated with compliance. Additionally, defending against lawsuits and other proceedings may involve significant
expense and divert management's attention and resources from other matters.
Changes to the National Labor Relations Act or other labor-related statutes or regulations could have an adverse impact
on our costs and impair the viability of our operating model.
As an employer of approximately 125,000 people in a large number of different jurisdictions, we are subject to risks related to
employment laws and regulations including, for example:
• unionization and related regulations that affect the nature of labor relations, the organization of unions and union
elections; in the U.S. the National Labor Relations Board continually considers changes to such regulations; as of
January 30, 2016, none of our U.S. operations had employees represented by labor unions or working under collective
bargaining agreements;
• laws that impact the relationship between the company and independent contractors; and
• laws that impact minimum wage and scheduling requirements, that could directly or indirectly increase our payroll
costs and/or impact the level of service we are able to provide.
Changes to laws and regulations such as these could adversely impact our reputation, our ability to continue operations and
thus our revenue and profitability.
Economic, regulatory and other developments could adversely affect our ability to offer attractive promotional
financing to our customers and adversely affect the profits we generate from these programs.
We offer promotional financing and credit cards issued by third-party banks that manage and directly extend credit to our
customers. Customers choosing promotional financing can receive extended payment terms and low- or no-interest financing
on qualifying purchases. We view our financing programs as a way to generate incremental revenue of products and services
from customers who prefer the financing terms to other available forms of payment. Approximately 21% of our fiscal 2016
revenue was transacted using one of the company's branded cards. In addition, we earn profit-share income from our banking
partners based on the performance of the programs. The income we earn in this regard is subject to numerous factors, including
the volume and value of transactions, the terms of promotional financing offers, bad debt rates, interest rates, the regulatory and
competitive environment and expenses of operating the program. Adverse changes to any of these factors could impair our
ability to offer these programs to customers and reduce our ability to earn income from sharing in the profits of the programs.
We rely heavily on our information technology systems for our key business processes. Any failure or interruption in
these systems could have a material adverse impact on our business.
The effective and efficient operation of our business is dependent on our management information systems. We rely heavily on
our management information systems to manage all key aspects of our business, including demand forecasting, purchasing,
supply chain management, point-of-sale processing, services fulfillment, staff planning and deployment, website offerings,
financial management, reporting and forecasting and safeguarding critical and sensitive information. The failure of our
management information systems to perform as we anticipate (whether from internal or external factors), or to meet the
continuously evolving needs of our business, could significantly disrupt our business and cause, for example, higher costs and
lost revenues and could threaten our ability to remain in operation.