Best Buy 2016 Annual Report Download - page 45

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37
International Segment
During the first quarter of fiscal 2016, we consolidated the Future Shop and Best Buy stores and websites in Canada under the
Best Buy brand. This resulted in the permanent closure of 66 Future Shop stores and the conversion of the remaining 65 Future
Shop stores to the Best Buy brand. The costs of implementing these changes primarily consisted of lease exit costs, a tradename
impairment, property and equipment impairments, employee termination benefits and inventory write-downs. In fiscal 2016,
we incurred total pre-tax restructuring charges, other Canadian brand consolidation charges (charges that did not qualify as
restructuring charges) and property and equipment impairment of $209 million of out of the previously disclosed expected
range of approximately $210 million to $250 million related to those actions. As we continue to solidify our strategy for our
Canada transformation, we may incur additional charges of up to $35 million in future periods primarily related to non-
restructuring asset impairments.
The following table presents selected financial data for our International segment for each of the past three fiscal years ($ in
millions):
International Segment Performance Summary 2016 2015 2014
Revenue $ 3,163 $ 4,284 $ 4,780
Revenue decline % (26.2)% (10.4)% (5.0)%
Comparable sales % decline(1) n/a (3.5)% (5.1)%
Restructuring charges - cost of goods sold $ 3 $ — $ —
Gross profit $ 707 $ 967 $ 1,125
Gross profit as % of revenue 22.4 % 22.6 % 23.5 %
SG&A $ 721 $ 953 $ 1,100
SG&A as % of revenue 22.8 % 22.2 % 23.0 %
Restructuring charges $ 196 $ 1 $ 26
Operating income (loss) $ (210) $ 13 $ (1)
Operating income (loss) as % of revenue (6.6)% 0.3 % — %
(1) The Canadian brand consolidation has a material impact on a year-over-year basis on the Canadian retail stores and the website. As such, beginning in the
first quarter of fiscal 2016, all store and website revenue has been removed from the comparable sales base, and an International segment (comprised of
Canada and Mexico) comparable sales metric has not been provided.
The following table reconciles our International segment stores open at the end of each of the last three fiscal years:
Fiscal 2014 Fiscal 2015 Fiscal 2016
Total Stores
at End of
Fiscal Year
Stores
Opened
Stores
Closed
Total Stores
at End of
Fiscal Year
Stores
Opened
Stores
Closed
Stores
Converted
Total Stores
at End of
Fiscal Year
Canada
Future Shop 137 1 (5) 133 — (68)(65)—
Best Buy 72 — (1)713
(3) 65 136
Best Buy Mobile 56 — — 56 — — — 56
Mexico
Best Buy 17 1 — 18 — — — 18
Express 2 3 — 5 1 — — 6
Total International segment stores 284 5 (6) 283 4 (71) — 216
Fiscal 2016 Results Compared With Fiscal 2015
In our International segment, revenue declined 26.2% to $3.2 billion in fiscal 2016 due to (1) the loss of revenue associated
with closed stores as part of the Canadian brand consolidation; (2) a negative foreign currency impact of 12.5%; and (3)
ongoing softness in the Canadian economy and consumer electronics industry.