Best Buy 2015 Annual Report Download - page 13

Table of Contents
6
Suppliers and Inventory
Our Domestic and International segments purchase merchandise from a variety of suppliers. In fiscal 2015, our 20 largest
suppliers accounted for approximately 73% of the merchandise we purchased, with 5 suppliers – Apple, Samsung, Hewlett-
Packard, Sony and LG Electronics – representing approximately 47% of total merchandise purchased. We generally do not
have long-term contracts with our major suppliers that require them to continue supplying us with merchandise.
We carefully monitor and manage our inventory levels to match quantities on hand with consumer demand as closely as
possible. Key elements to our inventory management process include the following: continuous monitoring of historical and
projected consumer demand, continuous monitoring and adjustment of inventory receipt levels, agreements with vendors
relating to reimbursement for the cost of markdowns or sales incentives and agreements with vendors relating to return
privileges for certain products.
We also have a global sourcing operation to design, develop, test and contract-manufacture our own line of exclusive brand
products.
Store Development
We had over 1,700 large and small-format stores at the end of fiscal 2015 throughout our Domestic and International segments.
We believe this store footprint represents an advantage that we can leverage as we continue to transform our business. In the
U.S., we have the ability to ship from all of our Best Buy stores, and we have opened a number of vendor store-within-a-store
concepts to better leverage our square footage. In fiscal 2016 and beyond, we will continue to look for opportunities to
optimize our store space, renegotiating leases and selectively opening or closing locations to support our ongoing
transformation.
In March 2015, we made a decision to consolidate Future Shop and Best Buy stores and websites in Canada under the Best Buy
brand. This resulted in permanently closing 66 Future Shop stores and converting 65 Future Shop stores to the Best Buy brand.
Refer to Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, for tables
reconciling our Domestic and International segment stores open at the end of each of the last three fiscal years.
Intellectual Property
We own or have the right to use valuable intellectual property such as trademarks, service marks and tradenames, including, but
not limited to, Best Buy, Best Buy Mobile, Dynex, Future Shop, Geek Squad, Init, Insignia, Magnolia, Modal, My Best Buy,
Pacific Sales, Rocketfish, and our Yellow Tag logo.
We have secured domestic and international trademark and service mark registrations for many of our brands. We have also
secured patents for many of our inventions. We believe our intellectual property has significant value and is an important factor
in the marketing of our company, our stores, our products and our websites.
Seasonality
Our business, like that of many retailers, is seasonal. A higher proportion of our revenue and earnings is generated in the fiscal
fourth quarter, which includes the majority of the holiday shopping season in the U.S., Canada and Mexico.
Working Capital
We fund our business operations through a combination of available cash and cash equivalents, short-term investments and
cash flows generated from operations. In addition, our revolving credit facilities are available for additional working capital
needs, for general corporate purposes and investment opportunities. Our working capital needs typically increase in the months
leading up to the holiday shopping season as we purchase inventory in advance of expected sales.
Competition
Our competitors are primarily traditional store-based retailers, multi-channel retailers, internet-based businesses and vendors
and mobile network carriers who offer their products directly to the consumer.