Best Buy 2016 Annual Report Download - page 42

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Domestic segment revenue of $36.4 billion in fiscal 2016 increased 0.9% compared to the prior year. This increase was
primarily driven by a comparable sales growth of 0.5%, which included an estimated 0.6% of revenue benefit associated with
installment billing and a periodic profit sharing benefit based on performance of our externally managed extended service plan
portfolio.
Domestic segment online revenue of $4.0 billion increased 13.5% on a comparable basis primarily due to higher conversion
rates and increased traffic. As a percentage of total Domestic revenue, online revenue increased 120 basis points to 11.0%
versus 9.8% last year.
The components of the 0.9% revenue increase in the Domestic segment in fiscal 2016 were as follows:
Comparable sales impact 0.5%
Non-comparable sales(1) 0.4%
Total revenue increase 0.9%
(1) Non-comparable sales reflects the impact of net store opening and closing activity, as well as the impact of revenue streams not included within our
comparable sales calculation, such as profit sharing benefits, credit card revenue, gift card breakage, commercial sales and sales of merchandise to
wholesalers and dealers.
The following table presents the Domestic segment's revenue mix percentages and comparable sales percentage changes by
revenue category in fiscal 2016 and 2015:
Revenue Mix Summary Comparable Sales Summary
Year Ended Year Ended
January 30, 2016 January 31, 2015 January 30, 2016 January 31, 2015
Consumer Electronics 32% 31% 4.7 % 3.7 %
Computing and Mobile Phones 46% 47% (2.6)% (0.6)%
Entertainment 8% 9% (3.6)% 4.5 %
Appliances 8% 7% 15.4 % 7.5 %
Services 5% 5% (11.6)% (11.1)%
Other 1% 1% n/a n/a
Total 100% 100% 0.5 % 1.0 %
The following is a description of the notable comparable sales changes in our Domestic segment by revenue category:
• Consumer Electronics: The 4.7% comparable sales increase was primarily due to an increase in the sales of large
screen televisions, the expansion of Magnolia Design Center stores-within-a-store, and expanded assortment of
streaming devices. This increase was partially offset by industry declines in point and shoot cameras and lower sales in
small and mid-size televisions.
• Computing and Mobile Phones: The 2.6% comparable sales decline was primarily due to continued industry
declines in tablets and to a lesser extent lower demand for mobile phones.
• Entertainment: The 3.6% comparable sales decrease was driven by declines in music and movies due to continued
industry declines as well as declines in gaming hardware.
• Appliances: The 15.4% comparable sales gain was a result of continued growth in major appliances sales as well as
the expansion of Pacific Kitchen & Home stores-within-a-store.
• Services: The 11.6% comparable sales decline was primarily due to lower repair revenue from extended protection
plan claims. This trend, which primarily related to mobile phones, was a reflection of changes to the design of our
extended protection plans, improvements to our repair and fulfillment operations and industry trends.
Our Domestic segment experienced an increase in gross profit of $404 million, or 5.0%, in fiscal 2016 compared to fiscal 2015.
Excluding the $88 million of CRT/LCD litigation settlement proceeds received in fiscal 2016, we experienced an increase in
gross profit of $316 million, or 3.9%. Refer to Note 12, Contingencies and Commitments, in the Notes to the Consolidated
Financial Statements, included in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K
for additional information. This rate increase was primarily due to (1) the periodic profit-share revenue described above; (2)
rate improvements in computing hardware driven by our more disciplined promotional strategy; (3) an additional positive mix
shift due to significantly decreased revenue in the lower-margin tablet category; (4) the positive impact of lower repair revenue