Best Buy 2014 Annual Report Download - page 3

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(3) We partnered with two of our top vendors to develop and launch 1,400 Samsung and
600 Windows “stores-within-a-store,” in a win-win-win arrangement that is benefiting our
customers, vendors and shareholders.
(4) In terms of financial results, we made progress in stabilizing our top-line despite industry
softness, delivered cost reductions above our original target, and strengthened our
balance sheet:
Our Domestic comparable store sales were down (0.4%); however, when adjusted for
the rationalization of non-core businesses and the short-term disruption from
optimizing our retail floor space, Domestic comparable store sales were essentially
flat.
In little more than a year, we exceeded our multi-year Renew Blue cost reduction
target of $725 million by executing annualized total reductions of $765 million, of
which $350 million were realized in FY ’14.
While we have not yet stabilized our operating margin, cost savings and operational
improvements offset the investments we made in pricing and other Renew Blue
investments.
And we significantly strengthened our balance sheet through a renewed focus on our
core businesses and a substantially more disciplined capital allocation process. In FY
‘14, we (1) sold our interest in Europe; (2) sold mindSHIFT Technologies; (3)
restructured our IT infrastructure to accelerate strategic systems development and
optimize cost; and (4) continued to aggressively optimize inventory.
Now, looking ahead, we turn to the next chapter of our transformation, one we call Renew
Blue: Ignite the Possible. In this phase, we remain focused on the two problems we had to
solve and our core strategy: to be the authority and destination for technology products and
services.
Behind this strategy lies a clear mission for Best Buy: enrich and empower people’s lives
through technology. The way we do this is by helping customers discover, choose, purchase,
pay for, finance, activate, use, enjoy and eventually recycle technology products and
solutions. The second part of our mission deals with our vendors, and it is to partner with
them to market their products and solutions in a highly effective fashion, providing the best
online and in-store showrooms.
Our transformation is a multi-year journey. Building on the momentum we have established
in the first year, we will continue to address three business imperatives that are essential to
our transformation:
(1) Improving our operational performance
(2) Building foundational capabilities necessary to unlock future growth strategies
(3) Leveraging our unique assets to create significant differentiation that is meaningful for
our customers and our vendors
Underpinning this is a couple of beliefs. One, we have significant, unique assets that we can
build upon to provide a superior customer experience, including our customer database,
store footprint, multi-channel capabilities, relationships with key vendors and service