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35
(as discussed above), which typically earns a low gross profit rate; (5) an increased mix of higher-margin large screen
televisions; and (6) positive revenue impact related to our credit card portfolio. These increases were partially offset by (1)
lower rates related to large appliances; (2) a lower rate in the mobile category driven by increased sales of higher priced iconic
mobile phones, which have higher gross profit dollars but carry a lower gross profit rate; (3) decrease in margin for portable
audio products; (4) a decreased mix of higher-margin digital imaging products; (5) an increased mix of lower-margin wearable
devices; and (6) an investment in services pricing.
Our Domestic segment's SG&A increased $258 million, or 3.9%, in fiscal 2016 compared to fiscal 2015. In addition, the
SG&A rate increased to 19.0% of revenue compared to 18.4% of revenue in the prior year. The increases in SG&A and SG&A
rate were primarily driven by investments in growth initiatives, a greater portion of our vendor funding being recorded as an
offset to cost of goods sold rather than SG&A and higher incentive compensation. This increase was partially offset by the
implementation of Renew Blue Phase 2 cost reductions.
Our Domestic segment recorded $2 million of restructuring charges in fiscal 2016 and incurred $4 million of restructuring
charges in fiscal 2015. The restructuring charges had an immaterial impact on our operating income rate in fiscal 2016 and
fiscal 2015. Refer to Note 4, Restructuring Charges, of the Notes to Consolidated Financial Statements, included in Item 8,
Financial Statements and Supplementary Data, of this Annual Report on Form 10-K for further information about our
restructuring activities.
Our Domestic segment’s operating income increased $148 million in fiscal 2016 compared to fiscal 2015. In addition, the
operating income rate increased to 4.4% of revenue in fiscal 2016 compared to 4.0% of revenue in the prior year. The increase
was driven by higher revenue and margin and $75 million in net CRT/LCD litigation settlement proceeds received in fiscal
2016, partially offset by the increase in SG&A as described above.
Fiscal 2015 Results Compared With Fiscal 2014
Domestic segment revenue increased from $35.8 billion in fiscal 2014 to $36.1 billion in fiscal 2015, primarily driven by
comparable sales growth of 1.0%. Excluding the 0.5% of revenue estimated benefit associated with the classification of the
new mobile carrier installment billing plans, comparable sales increased 0.5%. Online revenue was $3.5 billion, and we
experienced comparable online sales growth of 16.7% due to: (1) improved inventory availability made possible by the chain-
wide rollout of our ship-from-store capability that was completed in January 2014; (2) higher average order value; and (3)
increased traffic driven by greater investment in online digital marketing.
The components of the 0.6% revenue increase in the Domestic segment in fiscal 2015 were as follows:
Comparable sales impact 0.9 %
Non-comparable sales(1) (0.2)%
Net store changes (0.1)%
Total revenue increase 0.6 %
(1) Non-comparable sales reflects the impact of revenue streams not included within our comparable sales calculation, such as credit card revenue, gift card
breakage, commercial sales and sales of merchandise to wholesalers and dealers.
The net store changes did not have a material impact on our revenue in fiscal 2015, as the majority of closures occurred in the
fourth quarter and related to our small-format Best Buy Mobile stand-alone stores. The closing of small-format Best Buy
Mobile stores have a significantly smaller impact given their smaller size and limited category focus compared to our large-
format stores.