Best Buy 2006 Annual Report Download - page 19

Download and view the complete annual report

Please find page 19 of the 2006 Best Buy annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 118

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118

5
PART I
PART I
Item 1. Business.
Description of Business
Best Buy Co., Inc. (Best Buy, we or us) is aspecialty retailer
of consumer electronics, home-office products,
entertainment software, appliances and related services. We
operate retail stores and commercial Web sites under the
brand names Best Buy (BestBuy.com and
BestBuyCanada.ca), Future Shop (FutureShop.ca),
MagnoliaAudio Video (MagnoliaAV.com) and Geek Squad
(GeekSquad.com and GeekSquad.ca). References to our
Web site addresses do not constitute incorporation by
reference of the information contained on the Web sites,
and such information is not partof this document.
Our vision is to make life fun and easy for consumers. Our
business strategy is to treat each customer as a unique
individual,meetingtheir needs with end-to-end solutions,
and engaging and energizing our employees to serve them,
while maximizing overall profitability. We believe weoffer
consumers meaningful advantages in store environment,
product value, product selection and a variety of in-store
and in-home services related to the merchandise weoffer,
all of which advanceour objectives of enhancing our
business model, gaining market share and improving
profitability. We believe that ourstrategic initiativeswill
furtherenhance our business model. Additional information
on our strategic initiatives is included in Item 7,
Management’s Discussion and Analysisof Financial
Condition and Results of Operations,of this Annual Report
on Form 10-K.
Organizational Changes
In January 2006, we announced changes to our
organizational structure to support ourcommitment to
deliver long-term, profitable growth. Specifically, effective at
the beginning of fiscal 2007, Brian J. Dunn was promoted
to President andChief Operating Officer of the company,
and Robert A. Willett waspromoted to Chief Executive
Officer — Best Buy International. In addition, Allen U.
Lenzmeier has decided to remainin his current role as Vice
Chairman, serving on apart-time basis to support our
international expansion.
The changes reflect our strategyof driving the performance
of the current business while investing in targeted long-term
growth opportunities. We believe the new organizational
structure increases accountability and collaboration while
enablingour leadership team to focus on growth strategies
andour ongoing transformation to customer centricity.
Information About Our Segments
During fiscal 2006, we operated two reportable segments:
Domestic and International. The Domestic segment is
comprised of allU.S. store andonline operations, including
Best Buy, Magnolia Audio Video and Geek Squad.Best Buy
stores offer a wide variety of consumer electronics, home-
office products, entertainment software, appliancesand
related services. Magnolia Audio Video stores o ffer high-
end audio andvideo products, and services. Geek Squad
offers residential and commercial computer support. The
International segment is comprised of allCanadian store
and online operations, including Future Shop,Best Buy and
Geek Squad. The International segment offers products and
services similar to those offered by the Domestic segment.
However, Canadian Best Buy stores do not carry
appliances.
Financial information about our segments is included in
Item 7, Management’s Discussionand Analysisof Financial
Condition and Results of Operations, and Note 10,
Segments, of the Notes to Consolidated Financial
Statements, included in Item 8, Financial Statements and
Supplementary Data, of this Annual Report on Form 10-K.
Domestic Segment
We were incorporated in the state of Minnesota in 1966 as
Soundof Music, Inc., and changed our name to Best Buy
Co., Inc. in 1983. We began as an audio components
retailer and, with the introduction of the videocassette
recorder in the early 1980s, expanded into video products.
In 1983, we revised our marketing strategy and began
using mass-merchandising techniques, which included
offering a wider variety of products and operating stores
under a “superstore” concept. In 1989, we dramatically
changed our method of retailing by introducinga self-
service, noncommissioned, discount-style store concept
designed to give the customer more control over the
purchasing process.