Best Buy 2015 Annual Report Download - page 41

Table of Contents
34
Our Domestic segment's SG&A decreased $367 million, or 5.2%, in fiscal 2015 compared to fiscal 2014. In addition, the
SG&A rate decreased by 1.2% of revenue compared to the prior year. The decreases in SG&A and SG&A rate were primarily
driven by the realization of Renew Blue cost reduction initiatives and the benefit from tighter expense management throughout
the company. These declines were partially offset by Renew Blue investments in online growth and our in-store experience, as
well as higher incentive compensation.
Our Domestic segment recorded $4 million of restructuring charges in fiscal 2015 and incurred $123 million of restructuring
charges in fiscal 2014. The restructuring charges had an immaterial impact on our operating income rate in fiscal 2015 and
resulted in a decrease in our operating income rate in fiscal 2014 of 0.3% of revenue. 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 $292 million, or 0.8% of revenue, in fiscal 2015 compared to fiscal 2014.
The increase was driven by lower SG&A, a comparable sales gain and lower restructuring charges, partially offset by the
decrease in gross profit from the prior-year LCD settlements described above.
Fiscal 2014 (12-month) Results Compared With Fiscal 2013 (11-month)
For purposes of this section, fiscal 2014 (12-month) represents the 12-month period ended February 1, 2014 and fiscal 2013
(11-month) represents the 11-month transition period ended February 2, 2013.
During fiscal 2014 (12-month), we made substantial progress against our Renew Blue priorities. First, we exceeded our original
Renew Blue annualized cost reduction target. Second, we made progress stabilizing our comparable store sales and operating
income rate. In our Domestic segment, comparable stores were nearly flat for fiscal 2014 (12-month). Domestic operating
income increased in fiscal 2014 (12-month); however, this was driven by LCD-related legal settlements and lower restructuring
charges. Excluding these items, our operating income rate decreased primarily due to a lower gross profit rate, which was only
partially offset by cost reduction initiatives and tighter expense management.
The components of the 7.9% revenue increase in the Domestic segment in fiscal 2014 (12-month) were as follows:
Extra month of revenue(1) 8.2 %
Net store changes (0.2)%
Comparable sales impact (0.1)%
Total revenue increase 7.9 %
(1) Represents the incremental revenue in fiscal 2014, which had 12 months of activity compared to 11 months in fiscal 2013 as a result of our fiscal year-end
change. Refer to Note 1, Summary of Significant Accounting Policies, 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.
The decrease in revenue from net store changes was primarily due to the closure of 47 large-format Best Buy branded stores in
the second and third quarter of fiscal 2013 (11-month). The opening and closing of small-format Best Buy Mobile stores had a
significantly smaller impact given their smaller size and limited category focus compared to our large-format stores.
The following table presents the Domestic segment's revenue mix percentages and comparable store sales percentage changes
by revenue category in fiscal 2014 (12-month) and 2013 (11-month):
Revenue Mix Summary Comparable Store Sales Summary
12 Months Ended 11 Months Ended 12 Months Ended 11 Months Ended
February 1, 2014 February 2, 2013 February 1, 2014 February 2, 2013
Consumer Electronics(1) 30% 32% (5.6)% (8.0)%
Computing and Mobile Phones(1) 48% 45% 4.7 % 7.4 %
Entertainment 8% 10% (16.3)% (21.4)%
Appliances 7% 6% 16.7 % 10.1 %
Services 6% 6% 0.2 % 0.8 %
Other 1% 1% n/a n/a
Total 100% 100% (0.4)% (1.7)%