Domestic Segment Comparable Sales Increased 1.8%
GAAP Diluted EPS Increased 62% to $0.60
Non-GAAP Diluted EPS Increased 51% to $0.62
MINNEAPOLIS--(BUSINESS WIRE)--
Best Buy Co., Inc. (NYSE: BBY) today announced results for the third
quarter ended October 29, 2016 (“Q3 FY17”), as compared to the third
quarter ended October 31, 2015 (“Q3 FY16”). The company reported GAAP
diluted earnings per share from continuing operations of $0.60, an
increase of 62% from $0.37 in Q3 FY16. Non-GAAP diluted earnings per
share from continuing operations were $0.62, an increase of 51% from
$0.41 in Q3 FY16.
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Q3 FY17
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Q3 FY16
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Revenue ($ in millions)1
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Enterprise
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$8,945
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$8,819
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Domestic segment
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$8,192
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$8,090
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International segment
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$753
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$729
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Enterprise comparable sales % change
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1.8%
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0.8%
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Domestic comparable sales % change
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1.8%
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0.8%
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Domestic comparable online sales % change
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24.1%
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18.3%
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International revenue % change
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3.3%
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(29.9%)
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International revenue % change on a constant currency basis2
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4.0%
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(16.2%)
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Operating Income:
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GAAP operating income as a % of revenue
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3.5%
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2.6%
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Non-GAAP operating income as a % of revenue
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3.6%
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2.8%
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Diluted Earnings per Share (EPS):
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GAAP diluted EPS from continuing operations
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$0.60
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$0.37
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Non-GAAP diluted EPS from continuing operations
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$0.62
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$0.41
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For GAAP to non-GAAP reconciliations, please refer to the attached
supporting schedule titled “Reconciliation of non-GAAP Financial
Measures.”
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“We are pleased to report today growth on both our top and bottom
lines,” said Best Buy Chairman and CEO Hubert Joly. “We are excited by
the continued product innovation we are seeing, the role we play for
customers, the growth opportunities in front of us, the quality of our
execution and the strength of our financial performance.”
Joly concluded, “Looking ahead, our teams are ready to execute our plan
for the holiday season. As our marketing tagline, Holiday Gifting Made
Easy, states, our goal is to make holiday shopping effortless for
customers. To win holiday and deliver on this promise, we have created
an exciting assortment of great and competitively priced products, and
we have mobilized our assets, including our leading-edge digital
capabilities, fast and free shipping across the entire site during
holiday, and of course our knowledgeable Blue Shirts and Geek Squad
agents who are here to provide compelling in-store experiences and
in-home services.”
Corie Barry, Best Buy CFO, commented,“As we enter the fourth quarter and
execute against our holiday plan, which includes a disciplined
promotional strategy, we expect to deliver non-GAAP diluted earnings per
share in the range of $1.62 to $1.67 compared to $1.53 last year. This
outlook assumes a diluted weighted average share count of approximately
315 million and a non-GAAP effective income tax rate in the range of
35.0% to 35.5%. This fourth quarter outlook implies full year non-GAAP
diluted EPS in the range of $3.25 to $3.30, growth of 17% to 19% versus
last year.3”
Barry continued, “From a revenue standpoint, we are excited by the rate
of technology innovation, the quality of our assortment and our ability
to execute. That being said, we have updated our original expectations
to incorporate the impact of recent product recalls and the fact that
certain products will simply not be available for sale during our fourth
quarter. The expected impact of these recalls on our fourth quarter
Domestic revenue is approximately $200 million. With that incorporated,
our fourth quarter Enterprise revenue guidance is $13.4 to $13.6
billion.”
Domestic Segment Third Quarter Results
Domestic Revenue
Domestic revenue of $8.2 billion increased
1.3% versus last year driven by comparable sales growth of 1.8%,
partially offset by the loss of revenue from 14 large format and 23 Best
Buy Mobile store closures. Industry revenue in the NPD-tracked
categories declined 3.1%.4
From a merchandising perspective, comparable sales growth in home
theater, mobile phones, wearables and connected home was partially
offset by declines in gaming.
Domestic online revenue of $881 million increased 24.1% on a comparable
basis primarily due to increased traffic, higher average order values
and higher conversion rates. As a percentage of total Domestic revenue,
online revenue increased 200 basis points to 10.8% versus 8.8% last year.
Domestic Gross Profit Rate
Domestic GAAP and non-GAAP gross
profit rate was 24.7% versus 24.1% last year. The 60-basis point
increase was primarily due to improved margin rates in the computing and
home theater categories, which were partially offset by the mobile
category.
Domestic Selling, General and Administrative Expenses (“SG&A”)
Domestic
SG&A expenses were $1.72 billion, or 21.0% of revenue, versus $1.70
billion, or 21.0% of revenue, last year. On a non-GAAP basis, SG&A
expenses were $1.71 billion, or 20.9% of revenue, versus $1.69 billion,
or 20.9% of revenue, last year. For both GAAP and non-GAAP SG&A, the
increase was primarily driven by the timing of previously outlined
investments.
International Segment Third Quarter Results
International Revenue
International revenue of $753 million
increased 3.3% driven by growth in Canada and Mexico which was partially
offset by approximately 70 basis points of negative foreign currency
impact. On a constant currency basis, International revenue increased
4.0%.2
International Gross Profit Rate
International gross profit
rate was 24.3% versus 22.5% last year. On a non-GAAP basis, gross profit
rate was 24.3% versus 22.4% last year. For both the GAAP and non-GAAP
gross profit rate, the improvement was primarily driven by a higher
year-over-year gross profit rate in Canada due to a more favorable
product mix and lapping the disruption and corresponding increased
promotional activity last year related to the brand consolidation.
International SG&A
International SG&A expenses were $170
million, or 22.6% of revenue, versus $172 million, or 23.6% of revenue,
last year. On a non-GAAP basis, SG&A expenses were $169 million, or
22.4% of revenue, versus $171 million, or 23.5% of revenue, last year.
For both GAAP and non-GAAP SG&A, the decrease was primarily driven by
the positive impact of foreign exchange rates. The GAAP and non-GAAP
rate decreases were primarily driven by sales leverage.
Share Repurchases and Dividends
During
Q3 FY17, the company returned a total of $290 million to shareholders
through share repurchases and dividends. On a year-to-date basis, the
company has returned a total of $931 million to shareholders through
share repurchases and dividends.
On February 25, 2016, the company announced the intent to repurchase $1
billion of its shares over a two-year period. In Q3 FY17, the company
repurchased 5.4 million shares for a total of $201 million. On a
year-to-date basis, the company has repurchased 15.7 million shares for
a total of $517 million. The company’s cumulative share repurchases, net
of dilution from equity based awards, positively benefitted GAAP and
non-GAAP diluted EPS by $0.05 in Q3 FY17.
On October 4, 2016, the company paid a quarterly dividend of $0.28 per
common share outstanding, or $89 million. On a year-to-date basis, the
company has paid $414 million in regular and special dividends.
Q4 FY17 Financial Guidance
Best Buy is providing the following Q4 FY17 financial guidance:
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Enterprise revenue in the range of $13.4 billion to $13.6 billion
-
Enterprise comparable sales change in the range of (1.0%) to 1.0%
-
Domestic comparable sales change in the range of (1.0%) to 1.0%
-
International comparable sales change in the range of (2.0%) to 2.0%
-
Non-GAAP effective income tax rate of 35.0% to 35.5%3
-
Diluted weighted average share count of approximately 315 million
-
Non-GAAP diluted EPS of $1.62 to $1.673
Note: In Q4 FY17, International revenue is expected to once again be
comparable on a year-over-year basis and therefore the company is now
guiding Enterprise, Domestic and International comparable sales.5
Reminder: Discontinuation of Holiday Sales
Press Release in FY17
Beginning in January FY17, the
company will no longer issue an interim Holiday press release due to the
increasing significance of the month of January to the company’s overall
fourth quarter financial results.
Conference Call
Best Buy is
scheduled to conduct an earnings conference call at 8:00 a.m. Eastern
Time (7:00 a.m. Central Time) on November 17, 2016. A webcast of the
call is expected to be available at www.investors.bestbuy.com
both live and after the call.
(1) On March 28, 2015, the company 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, the
conversion of 65 Future Shop stores to Best Buy stores and the
elimination of the Future Shop website. The Canadian brand consolidation
has a material impact on a year-over-year basis on the Canadian retail
stores and the website. As such, all store and website revenue has been
removed from the comparable sales base and International (comprised of
Canada and Mexico) no longer has a comparable metric until International
revenue is comparable on a year-over-year basis. Therefore, Enterprise
comparable sales will be equal to Domestic comparable sales until
International revenue is again comparable on a year-over-year basis.
Additionally, the company is no longer reporting comparable sales
excluding the impact of installment billing as the mix of installment
billing plans is comparable on a year-over-year basis.
(2) The term constant currency represents results adjusted to exclude
foreign currency impacts. Foreign currency impact represents the
difference in results that is attributable to fluctuations in currency
exchange rates the company uses to convert the results of its
International segment where the functional currency is not the U.S.
dollar. The company calculates the impact as the difference between the
current period results translated using the current period currency
exchange rates and using the comparable prior period’s currency exchange
rates. The company believes the disclosure of revenue changes in
constant currency provides useful supplementary information to investors
in light of significant fluctuations in currency rates and ongoing
inability to report comparable store sales for the International segment
as a result of the Canadian brand consolidation. On a constant currency
basis, revenue for the International segment was $753 million in Q3 FY17
and $724 million in Q3 FY16 reflecting a foreign currency impact of
negative $5 million on Q3 FY16.
(3) A reconciliation of the projected non-GAAP effective tax rate and
non-GAAP diluted EPS, which are forward-looking non-GAAP financial
measures, to the most directly comparable GAAP financial measures, is
not provided because the company is unable to provide such
reconciliation without unreasonable effort. The inability to provide a
reconciliation is due to the uncertainty and inherent difficulty
predicting the occurrence, the financial impact and the periods in which
the non-GAAP adjustments may be recognized. These GAAP measures may
include the impact of such items as restructuring charges; litigation
settlements; asset impairments, gains and losses; and the tax effect of
all such items. Historically, the company has excluded these items from
non-GAAP financial measures. The company currently expects to continue
to exclude these items in future disclosures of non-GAAP financial
measures and may also exclude other items that may arise (collectively,
“non-GAAP adjustments”). The decisions and events that typically lead to
the recognition of non-GAAP adjustments, such as a decision to exit part
of the business, the early retirement of an asset or reaching settlement
of a legal dispute, are inherently unpredictable as to if or when they
may occur. For the same reasons, the company is unable to address the
probable significance of the unavailable information, which could be
material to future results.
(4) According to The NPD Group’s Weekly Retail Tracking Service as
published November 7, 2016, revenue for the CE (Consumer Electronics)
industry declined 3.1% during the 13 weeks ended October 29,
2016 compared to the 13 weeks ended October 31, 2015. The categories
tracked by The NPD Group include TVs, desktop and notebook computers,
tablets, digital imaging and other categories. Sales of these products
represent approximately 63% of Domestic revenue. It does not include
mobile phones, appliances, services, gaming, Apple Watch, movies, music
or Amazon-branded products.
(5) Beginning in Q4 FY17, the company believes International revenue
will once again be comparable on a year-over-year basis and expects to
report comparable sales for the International segment on a go-forward
basis. At that time, Enterprise comparable sales will cease being equal
to Domestic comparable sales and instead will equal the sum of Domestic
and International comparable sales as they were before the Canadian
brand consolidation in Q1 FY16. As such, the company’s Q4 FY17 guidance
now includes comparable sales metrics for Enterprise, Domestic and
International.
Forward-Looking and Cautionary Statements:
This earnings
release contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995 as contained in Section
27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934 that reflect management’s current views and
estimates regarding future market conditions, company performance and
financial results, business prospects, new strategies, the competitive
environment and other events. You can identify these statements by the
fact that they use words such as “anticipate,” “believe,” ”assume,”
“estimate,” “expect,” “intend,” “project,” “guidance,” “plan,”
“outlook,” and other words and terms of similar meaning. These
statements involve a number of risks and uncertainties that could cause
actual results to differ materially from the potential results discussed
in the forward-looking statements. Among the factors that could cause
actual results and outcomes to differ materially from those contained in
such forward-looking statements are the following: macro-economic
conditions (including fluctuations in housing prices, oil markets and
jobless rates), conditions in the industries and categories in which we
operate, changes in consumer preferences, changes in consumer
confidence, consumer spending and debt levels, online sales levels and
trends, average ticket size, the mix of products and services offered
for sale in our physical stores and online, credit market changes and
constraints, product availability, competitive initiatives of
competitors (including pricing actions and promotional activities of
competitors), strategic and business decisions of our vendors (including
actions that could impact promotional support, product margin and/or
supply), the success of new product launches, the impact of pricing
investments and promotional activity, weather, natural or man-made
disasters, attacks on our data systems, the company’s ability to prevent
or react to a disaster recovery situation, changes in law or
regulations, changes in tax rates, changes in taxable income in each
jurisdiction, tax audit developments and resolution of other discrete
tax matters, foreign currency fluctuation, availability of suitable real
estate locations, the company’s ability to manage its property
portfolio, the impact of labor markets, the company’s ability to retain
qualified employees and changes in senior management, failure to achieve
anticipated expense and cost reductions from operational and
restructuring changes, disruptions in our supply chain, the costs of
procuring goods the company sells, failure to achieve anticipated
revenue and profitability increases from operational and restructuring
changes (including investments in our multi-channel capabilities and
brand consolidations), inability to secure or maintain favorable vendor
terms, failure to accurately predict the duration over which we will
incur costs, acquisitions and development of new businesses,
divestitures of existing businesses, failure to complete or achieve
anticipated benefits of announced transactions, integration challenges
relating to new ventures, and our ability to protect information
relating to our employees and customers. A further list and description
of these risks, uncertainties and other matters can be found in the
company’s annual report and other reports filed from time to time with
the Securities and Exchange Commission (“SEC”), including, but not
limited to, Best Buy’s Report on Form 10-K filed with the SEC on March
23, 2016. Best Buy cautions that the foregoing list of important factors
is not complete, and any forward-looking statements speak only as of the
date they are made, and Best Buy assumes no obligation to update any
forward-looking statement that it may make.
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BEST BUY CO., INC.
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CONSOLIDATED STATEMENTS OF EARNINGS
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($ in millions, except per share amounts)
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(Unaudited and subject to reclassification)
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|
|
|
|
|
|
|
|
|
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Three Months Ended
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Nine Months Ended
|
|
|
|
October 29,
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October 31,
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|
October 29,
|
|
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October 31,
|
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2016
|
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2015
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2016
|
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2015
|
Revenue
|
|
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$
|
8,945
|
|
|
|
$
|
8,819
|
|
|
|
$
|
25,921
|
|
|
|
$
|
25,905
|
|
Cost of goods sold
|
|
|
|
6,742
|
|
|
|
|
6,708
|
|
|
|
|
19,511
|
|
|
|
|
19,661
|
|
Restructuring charges - cost of goods sold
|
|
|
|
-
|
|
|
|
|
(1
|
)
|
|
|
|
-
|
|
|
|
|
4
|
|
Gross profit
|
|
|
|
2,203
|
|
|
|
|
2,112
|
|
|
|
|
6,410
|
|
|
|
|
6,240
|
|
Gross profit %
|
|
|
|
24.6
|
%
|
|
|
|
23.9
|
%
|
|
|
|
24.7
|
%
|
|
|
|
24.1
|
%
|
Selling, general and administrative expenses
|
|
|
|
1,890
|
|
|
|
|
1,874
|
|
|
|
|
5,407
|
|
|
|
|
5,451
|
|
SG&A %
|
|
|
|
21.1
|
%
|
|
|
|
21.2
|
%
|
|
|
|
20.9
|
%
|
|
|
|
21.0
|
%
|
Restructuring charges
|
|
|
|
1
|
|
|
|
|
8
|
|
|
|
|
30
|
|
|
|
|
185
|
|
Operating income
|
|
|
|
312
|
|
|
|
|
230
|
|
|
|
|
973
|
|
|
|
|
604
|
|
Operating income %
|
|
|
|
3.5
|
%
|
|
|
|
2.6
|
%
|
|
|
|
3.8
|
%
|
|
|
|
2.3
|
%
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of investments
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
2
|
|
|
|
|
2
|
|
Investment income and other
|
|
|
|
8
|
|
|
|
|
3
|
|
|
|
|
22
|
|
|
|
|
14
|
|
Interest expense
|
|
|
|
(16
|
)
|
|
|
|
(20
|
)
|
|
|
|
(54
|
)
|
|
|
|
(60
|
)
|
Earnings from continuing operations before income tax expense
|
|
|
|
304
|
|
|
|
|
213
|
|
|
|
|
943
|
|
|
|
|
560
|
|
Income tax expense
|
|
|
|
112
|
|
|
|
|
84
|
|
|
|
|
343
|
|
|
|
|
230
|
|
Effective tax rate
|
|
|
|
36.7
|
%
|
|
|
|
39.4
|
%
|
|
|
|
36.4
|
%
|
|
|
|
41.1
|
%
|
Net earnings from continuing operations
|
|
|
|
192
|
|
|
|
|
129
|
|
|
|
|
600
|
|
|
|
|
330
|
|
Earnings (loss) from discontinued operations, net of tax
|
|
|
|
2
|
|
|
|
|
(4
|
)
|
|
|
|
21
|
|
|
|
|
88
|
|
Net earnings
|
|
|
$
|
194
|
|
|
|
$
|
125
|
|
|
|
$
|
621
|
|
|
|
$
|
418
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per share
|
|
|
|
|
|
Continuing operations
|
|
|
$
|
0.61
|
|
|
|
$
|
0.37
|
|
|
|
$
|
1.87
|
|
|
|
$
|
0.95
|
|
Discontinued operations
|
|
|
|
-
|
|
|
|
|
(0.01
|
)
|
|
|
|
0.07
|
|
|
|
|
0.25
|
|
Basic earnings per share
|
|
|
$
|
0.61
|
|
|
|
$
|
0.36
|
|
|
|
$
|
1.94
|
|
|
|
$
|
1.20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) per share
|
|
|
|
|
|
Continuing operations
|
|
|
$
|
0.60
|
|
|
|
$
|
0.37
|
|
|
|
$
|
1.85
|
|
|
|
$
|
0.93
|
|
Discontinued operations
|
|
|
|
0.01
|
|
|
|
|
(0.01
|
)
|
|
|
|
0.07
|
|
|
|
|
0.25
|
|
Diluted earnings per share
|
|
|
$
|
0.61
|
|
|
|
$
|
0.36
|
|
|
|
$
|
1.92
|
|
|
|
$
|
1.18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per common share
|
|
|
$
|
0.28
|
|
|
|
$
|
0.23
|
|
|
|
$
|
1.29
|
|
|
|
$
|
1.20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding
|
|
|
|
|
|
Basic
|
|
|
|
316.2
|
|
|
|
|
344.7
|
|
|
|
|
320.2
|
|
|
|
|
348.9
|
|
Diluted
|
|
|
|
320.0
|
|
|
|
|
349.0
|
|
|
|
|
323.6
|
|
|
|
|
353.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BEST BUY CO., INC.
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
($ in millions)
|
(Unaudited and subject to reclassification)
|
|
|
|
|
|
|
|
|
|
|
October 29, 2016
|
|
|
October 31, 2015
|
ASSETS
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
1,341
|
|
|
$
|
1,697
|
Short-term investments
|
|
|
|
1,777
|
|
|
|
1,650
|
Receivables, net
|
|
|
|
1,174
|
|
|
|
1,061
|
Merchandise inventories
|
|
|
|
6,331
|
|
|
|
6,651
|
Other current assets
|
|
|
|
398
|
|
|
|
409
|
Total current assets
|
|
|
|
11,021
|
|
|
|
11,468
|
Property and equipment, net
|
|
|
|
2,298
|
|
|
|
2,329
|
Goodwill
|
|
|
|
425
|
|
|
|
425
|
Intangibles, net
|
|
|
|
18
|
|
|
|
18
|
Other assets
|
|
|
|
780
|
|
|
|
897
|
Non-current assets held for sale
|
|
|
|
-
|
|
|
|
32
|
TOTAL ASSETS
|
|
|
$
|
14,542
|
|
|
$
|
15,169
|
|
|
|
|
|
|
|
LIABILITIES & EQUITY
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
Accounts payable
|
|
|
$
|
6,233
|
|
|
$
|
6,184
|
Unredeemed gift card liabilities
|
|
|
|
377
|
|
|
|
379
|
Deferred revenue
|
|
|
|
380
|
|
|
|
330
|
Accrued compensation and related expenses
|
|
|
|
308
|
|
|
|
306
|
Accrued liabilities
|
|
|
|
782
|
|
|
|
790
|
Accrued income taxes
|
|
|
|
43
|
|
|
|
23
|
Current portion of long-term debt
|
|
|
|
43
|
|
|
|
383
|
Total current liabilities
|
|
|
|
8,166
|
|
|
|
8,395
|
Long-term liabilities
|
|
|
|
791
|
|
|
|
874
|
Long-term debt
|
|
|
|
1,324
|
|
|
|
1,250
|
Equity
|
|
|
|
4,261
|
|
|
|
4,650
|
TOTAL LIABILITIES & EQUITY
|
|
|
$
|
14,542
|
|
|
$
|
15,169
|
|
|
|
|
|
|
|
|
|
|
BEST BUY CO., INC.
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
($ in millions)
|
(Unaudited and subject to reclassification)
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
October 29,
|
|
|
October 31,
|
|
|
|
2016
|
|
|
2015
|
OPERATING ACTIVITIES
|
|
|
|
|
|
|
Net earnings
|
|
|
$
|
621
|
|
|
|
$
|
418
|
|
Adjustments to reconcile net earnings to total cash provided by
operating activities:
|
|
|
|
|
|
|
Depreciation
|
|
|
|
491
|
|
|
|
|
494
|
|
Restructuring charges
|
|
|
|
30
|
|
|
|
|
189
|
|
Gain on sale of business, net
|
|
|
|
-
|
|
|
|
|
(99
|
)
|
Stock-based compensation
|
|
|
|
82
|
|
|
|
|
80
|
|
Deferred income taxes
|
|
|
|
28
|
|
|
|
|
(43
|
)
|
Other, net
|
|
|
|
(34
|
)
|
|
|
|
3
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
Receivables
|
|
|
|
80
|
|
|
|
|
229
|
|
Merchandise inventories
|
|
|
|
(1,370
|
)
|
|
|
|
(1,494
|
)
|
Other assets
|
|
|
|
(18
|
)
|
|
|
|
20
|
|
Accounts payable
|
|
|
|
1,801
|
|
|
|
|
1,152
|
|
Other liabilities
|
|
|
|
(192
|
)
|
|
|
|
(271
|
)
|
Income taxes
|
|
|
|
(124
|
)
|
|
|
|
(215
|
)
|
Total cash provided by operating activities
|
|
|
|
1,395
|
|
|
|
|
463
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES
|
|
|
|
|
|
|
Additions to property and equipment
|
|
|
|
(445
|
)
|
|
|
|
(493
|
)
|
Purchases of investments, net
|
|
|
|
(464
|
)
|
|
|
|
(196
|
)
|
Proceeds from sale of business, net of cash transferred upon sale
|
|
|
|
-
|
|
|
|
|
102
|
|
Proceeds from property disposition
|
|
|
|
56
|
|
|
|
|
-
|
|
Change in restricted assets
|
|
|
|
(8
|
)
|
|
|
|
(45
|
)
|
Settlement of net investment hedges
|
|
|
|
5
|
|
|
|
|
14
|
|
Total cash used in investing activities
|
|
|
|
(856
|
)
|
|
|
|
(618
|
)
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES
|
|
|
|
|
|
|
Repurchase of common stock
|
|
|
|
(472
|
)
|
|
|
|
(385
|
)
|
Repayments of debt
|
|
|
|
(384
|
)
|
|
|
|
(18
|
)
|
Dividends paid
|
|
|
|
(417
|
)
|
|
|
|
(421
|
)
|
Issuance of common stock
|
|
|
|
66
|
|
|
|
|
44
|
|
Other, net
|
|
|
|
20
|
|
|
|
|
19
|
|
Total cash used in financing activities
|
|
|
|
(1,187
|
)
|
|
|
|
(761
|
)
|
|
|
|
|
|
|
|
EFFECT OF EXCHANGE RATE CHANGES ON CASH
|
|
|
|
13
|
|
|
|
|
(13
|
)
|
DECREASE IN CASH AND CASH EQUIVALENTS
|
|
|
|
(635
|
)
|
|
|
|
(929
|
)
|
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
|
|
|
1,976
|
|
|
|
|
2,432
|
|
CASH AND CASH EQUIVALENTS HELD FOR SALE AT BEGINNING OF PERIOD
|
|
|
|
-
|
|
|
|
|
194
|
|
CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
|
|
$
|
1,341
|
|
|
|
$
|
1,697
|
|
|
|
|
|
|
|
|
|
|
|
|
BEST BUY CO., INC.
|
SEGMENT INFORMATION
|
($ in millions)
|
(Unaudited and subject to reclassification)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic Segment Performance Summary
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
October 29,
|
|
|
October 31,
|
|
|
October 29,
|
|
|
October 31,
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
Revenue
|
|
|
$8,192
|
|
|
$8,090
|
|
|
$23,910
|
|
|
$23,858
|
Gross profit
|
|
|
$2,020
|
|
|
$1,948
|
|
|
$5,901
|
|
|
$5,780
|
SG&A
|
|
|
$1,720
|
|
|
$1,702
|
|
|
$4,915
|
|
|
$4,922
|
Operating income
|
|
|
$298
|
|
|
$244
|
|
|
$959
|
|
|
$857
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Key Metrics
|
|
|
|
|
|
|
|
|
|
|
|
|
Comparable sales % change
|
|
|
1.8%
|
|
|
0.8%
|
|
|
0.8%
|
|
|
1.7%
|
Comparable online sales % change
|
|
|
24.1%
|
|
|
18.3%
|
|
|
23.9%
|
|
|
13.3%
|
Gross profit as a % of revenue
|
|
|
24.7%
|
|
|
24.1%
|
|
|
24.7%
|
|
|
24.2%
|
SG&A as a % of revenue
|
|
|
21.0%
|
|
|
21.0%
|
|
|
20.6%
|
|
|
20.6%
|
Operating income as a % of revenue
|
|
|
3.6%
|
|
|
3.0%
|
|
|
4.0%
|
|
|
3.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Results
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
$2,020
|
|
|
$1,948
|
|
|
$5,718
|
|
|
$5,692
|
Gross profit as a % of revenue
|
|
|
24.7%
|
|
|
24.1%
|
|
|
23.9%
|
|
|
23.9%
|
SG&A
|
|
|
$1,713
|
|
|
$1,693
|
|
|
$4,879
|
|
|
$4,878
|
SG&A as a % of revenue
|
|
|
20.9%
|
|
|
20.9%
|
|
|
20.4%
|
|
|
20.4%
|
Operating income
|
|
|
$307
|
|
|
$255
|
|
|
$839
|
|
|
$814
|
Operating income as a % of revenue
|
|
|
3.7%
|
|
|
3.2%
|
|
|
3.5%
|
|
|
3.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International Segment Performance Summary
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
October 29,
|
|
|
October 31,
|
|
|
October 29,
|
|
|
October 31,
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
Revenue
|
|
|
$753
|
|
|
$729
|
|
|
$2,011
|
|
|
$2,047
|
Gross profit
|
|
|
$183
|
|
|
$164
|
|
|
$509
|
|
|
$460
|
SG&A
|
|
|
$170
|
|
|
$172
|
|
|
$492
|
|
|
$529
|
Operating income (loss)
|
|
|
$14
|
|
|
($14)
|
|
|
$14
|
|
|
($253)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Key Metrics
|
|
|
|
|
|
|
|
|
|
|
|
|
Comparable sales % change1
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
Gross profit as a % of revenue
|
|
|
24.3%
|
|
|
22.5%
|
|
|
25.3%
|
|
|
22.5%
|
SG&A as a % of revenue
|
|
|
22.6%
|
|
|
23.6%
|
|
|
24.5%
|
|
|
25.8%
|
Operating income (loss) as a % of revenue
|
|
|
1.9%
|
|
|
(1.9%)
|
|
|
0.7%
|
|
|
(12.4%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Results
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
$183
|
|
|
$163
|
|
|
$509
|
|
|
$464
|
Gross profit as a % of revenue
|
|
|
24.3%
|
|
|
22.4%
|
|
|
25.3%
|
|
|
22.7%
|
SG&A
|
|
|
$169
|
|
|
$171
|
|
|
$489
|
|
|
$520
|
SG&A as a % of revenue
|
|
|
22.4%
|
|
|
23.5%
|
|
|
24.3%
|
|
|
25.4%
|
Operating income (loss)
|
|
|
$14
|
|
|
($8)
|
|
|
$20
|
|
|
($56)
|
Operating income (loss) as a % of revenue
|
|
|
1.9%
|
|
|
(1.1%)
|
|
|
1.0%
|
|
|
(2.7%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) On March 28, 2015, the company 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, the
conversion of 65 Future Shop stores to Best Buy stores and the
elimination of the Future Shop website. The Canadian brand
consolidation has a material impact on a year-over-year basis on the
Canadian retail stores and the website. As such, all store and
website revenue has been removed from the comparable sales base and
International (comprised of Canada and Mexico) no longer has a
comparable metric until International revenue is comparable on a
year-over-year basis.
|
|
|
BEST BUY CO., INC.
|
REVENUE CATEGORY SUMMARY
|
(Unaudited and subject to reclassification)
|
|
|
|
|
Revenue Mix Summary
|
|
|
Comparable Sales
|
|
|
|
Three Months Ended
|
|
|
Three Months Ended
|
|
|
|
October 29,
|
|
|
October 31,
|
|
|
October 29,
|
|
|
October 31,
|
Domestic Segment
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
Consumer Electronics
|
|
|
31%
|
|
|
30%
|
|
|
4.9%
|
|
|
3.0%
|
Computing and Mobile Phones
|
|
|
49%
|
|
|
49%
|
|
|
1.6%
|
|
|
(0.9%)
|
Entertainment
|
|
|
6%
|
|
|
6%
|
|
|
(9.4%)
|
|
|
(6.0%)
|
Appliances
|
|
|
9%
|
|
|
9%
|
|
|
3.0%
|
|
|
16.4%
|
Services
|
|
|
5%
|
|
|
5%
|
|
|
(1.8%)
|
|
|
(11.1%)
|
Other
|
|
|
0%
|
|
|
1%
|
|
|
N/A
|
|
|
N/A
|
Total
|
|
|
100%
|
|
|
100%
|
|
|
1.8%
|
|
|
0.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue Mix Summary
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
|
October 29,
|
|
|
October 31,
|
|
|
|
International Segment(1)
|
|
|
2016
|
|
|
2015
|
|
|
|
Consumer Electronics
|
|
|
28%
|
|
|
27%
|
|
|
|
|
|
|
Computing and Mobile Phones
|
|
|
54%
|
|
|
55%
|
|
|
|
|
|
|
Entertainment
|
|
|
6%
|
|
|
8%
|
|
|
|
|
|
|
Appliances
|
|
|
5%
|
|
|
4%
|
|
|
|
|
|
|
Services
|
|
|
6%
|
|
|
5%
|
|
|
|
|
|
|
Other
|
|
|
1%
|
|
|
1%
|
|
|
|
|
|
|
Total
|
|
|
100%
|
|
|
100%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) On March 28, 2015, the company 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, the
conversion of 65 Future Shop stores to Best Buy stores and the
elimination of the Future Shop website. The Canadian brand
consolidation has a material impact on a year-over-year basis on the
Canadian retail stores and the website. As such, all store and
website revenue has been removed from the comparable sales base and
International (comprised of Canada and Mexico) no longer has a
comparable metric until International revenue is comparable on a
year-over-year basis.
|
|
|
BEST BUY CO., INC.
|
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
|
CONTINUING OPERATIONS
|
($ in millions, except per share amounts)
|
(Unaudited and subject to reclassification)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following information provides reconciliations of the most
comparable financial measures from continuing operations
calculated and presented in accordance with accounting principles
generally accepted in the U.S. (“GAAP”) to presented non-GAAP
financial measures. The company believes that non-GAAP financial
measures, when reviewed in conjunction with GAAP financial
measures, can provide more information to assist investors in
evaluating current period performance and in assessing future
performance. For these reasons, internal management reporting also
includes non-GAAP measures. Generally, presented non-GAAP measures
include adjustments for items such as restructuring charges,
goodwill impairments, non-restructuring asset impairments and
gains or losses on investments. In addition, certain other items
may be excluded from non-GAAP financial measures when the company
believes this provides greater clarity to management and
investors. These non-GAAP financial measures should be considered
in addition to, and not superior to or as a substitute for the
GAAP financial measures presented in this earnings release and the
company’s financial statements and other publicly filed reports.
Non-GAAP measures as presented herein may not be comparable to
similarly titled measures used by other companies.
|
|
The following tables reconcile gross profit, SG&A, operating
income, effective tax rate, net earnings and diluted earnings per
share for the periods presented for continuing operations (GAAP
financial measures) to non-GAAP gross profit, non-GAAP SG&A,
non-GAAP operating income, non-GAAP effective tax rate, non-GAAP
net earnings and non-GAAP diluted earnings per share for
continuing operations (non-GAAP financial measures) for the
periods presented.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Three Months Ended
|
|
|
|
October 29, 2016
|
|
|
October 31, 2015
|
|
|
|
$
|
|
|
% of Rev.
|
|
|
$
|
|
|
% of Rev.
|
Domestic - Continuing Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
SG&A
|
|
|
$1,720
|
|
|
21.0%
|
|
|
$1,702
|
|
|
21.0%
|
Non-restructuring asset impairments - SG&A
|
|
|
(7)
|
|
|
(0.1%)
|
|
|
(9)
|
|
|
(0.1%)
|
Non-GAAP SG&A
|
|
|
$1,713
|
|
|
20.9%
|
|
|
$1,693
|
|
|
20.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
$298
|
|
|
3.6%
|
|
|
$244
|
|
|
3.0%
|
Non-restructuring asset impairments - SG&A
|
|
|
7
|
|
|
0.1%
|
|
|
9
|
|
|
0.1%
|
Restructuring charges
|
|
|
2
|
|
|
0.0%
|
|
|
2
|
|
|
0.0%
|
Non-GAAP operating income
|
|
|
$307
|
|
|
3.7%
|
|
|
$255
|
|
|
3.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International - Continuing Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
$183
|
|
|
24.3%
|
|
|
$164
|
|
|
22.5%
|
Restructuring charges - COGS
|
|
|
0
|
|
|
0.0%
|
|
|
(1)
|
|
|
(0.1%)
|
Non-GAAP gross profit
|
|
|
$183
|
|
|
24.3%
|
|
|
$163
|
|
|
22.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SG&A
|
|
|
$170
|
|
|
22.6%
|
|
|
$172
|
|
|
23.6%
|
Other Canada brand consolidation charges - SG&A1
|
|
|
0
|
|
|
0.0%
|
|
|
(1)
|
|
|
(0.1%)
|
Non-restructuring asset impairments - SG&A
|
|
|
(1)
|
|
|
(0.1%)
|
|
|
0
|
|
|
0.0%
|
Non-GAAP SG&A
|
|
|
$169
|
|
|
22.4%
|
|
|
$171
|
|
|
23.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income (loss)
|
|
|
$14
|
|
|
1.9%
|
|
|
($14)
|
|
|
(1.9%)
|
Restructuring charges - COGS
|
|
|
0
|
|
|
0.0%
|
|
|
(1)
|
|
|
(0.1%)
|
Other Canada brand consolidation charges - SG&A1
|
|
|
0
|
|
|
0.0%
|
|
|
1
|
|
|
0.1%
|
Non-restructuring asset impairments - SG&A
|
|
|
1
|
|
|
0.1%
|
|
|
0
|
|
|
0.0%
|
Restructuring charges
|
|
|
(1)
|
|
|
(0.1%)
|
|
|
6
|
|
|
0.8%
|
Non-GAAP operating income (loss)
|
|
|
$14
|
|
|
1.9%
|
|
|
($8)
|
|
|
(1.1%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated - Continuing Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
$2,203
|
|
|
24.6%
|
|
|
$2,112
|
|
|
23.9%
|
Restructuring charges - COGS
|
|
|
0
|
|
|
0.0%
|
|
|
(1)
|
|
|
(0.0%)
|
Non-GAAP gross profit
|
|
|
$2,203
|
|
|
24.6%
|
|
|
$2,111
|
|
|
23.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SG&A
|
|
|
$1,890
|
|
|
21.1%
|
|
|
$1,874
|
|
|
21.2%
|
Other Canada brand consolidation charges - SG&A1
|
|
|
0
|
|
|
0.0%
|
|
|
(1)
|
|
|
(0.0%)
|
Non-restructuring asset impairments - SG&A
|
|
|
(8)
|
|
|
(0.1%)
|
|
|
(9)
|
|
|
(0.1%)
|
Non-GAAP SG&A
|
|
|
$1,882
|
|
|
21.0%
|
|
|
$1,864
|
|
|
21.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
$312
|
|
|
3.5%
|
|
|
$230
|
|
|
2.6%
|
Restructuring charges - COGS
|
|
|
0
|
|
|
0.0%
|
|
|
(1)
|
|
|
(0.0%)
|
Other Canada brand consolidation charges - SG&A1
|
|
|
0
|
|
|
0.0%
|
|
|
1
|
|
|
0.0%
|
Non-restructuring asset impairments - SG&A
|
|
|
8
|
|
|
0.1%
|
|
|
9
|
|
|
0.1%
|
Restructuring charges
|
|
|
1
|
|
|
0.0%
|
|
|
8
|
|
|
0.1%
|
Non-GAAP operating income
|
|
|
$321
|
|
|
3.6%
|
|
|
$247
|
|
|
2.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
$112
|
|
|
|
|
|
$84
|
|
|
|
Effective tax rate
|
|
|
36.7%
|
|
|
|
|
|
39.4%
|
|
|
|
Income tax impact of non-GAAP adjustments2
|
|
|
3
|
|
|
|
|
|
2
|
|
|
|
Non-GAAP income tax expense
|
|
|
$115
|
|
|
|
|
|
$86
|
|
|
|
Non-GAAP effective tax rate
|
|
|
36.6%
|
|
|
|
|
|
37.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
|
|
|
$192
|
|
|
|
|
|
$129
|
|
|
|
Restructuring charges - COGS
|
|
|
0
|
|
|
|
|
|
(1)
|
|
|
|
Other Canada brand consolidation charges - SG&A1
|
|
|
0
|
|
|
|
|
|
1
|
|
|
|
Non-restructuring asset impairments - SG&A
|
|
|
8
|
|
|
|
|
|
9
|
|
|
|
Restructuring charges
|
|
|
1
|
|
|
|
|
|
8
|
|
|
|
Income tax impact of non-GAAP adjustments2
|
|
|
(3)
|
|
|
|
|
|
(2)
|
|
|
|
Non-GAAP net earnings
|
|
|
$198
|
|
|
|
|
|
$144
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS
|
|
|
$0.60
|
|
|
|
|
|
$0.37
|
|
|
|
Per share impact of restructuring charges - COGS
|
|
|
0.00
|
|
|
|
|
|
0.00
|
|
|
|
Per share impact of other Canada brand consolidation charges - SG&A1
|
|
|
0.00
|
|
|
|
|
|
0.00
|
|
|
|
Per share impact of non-restructuring asset impairments - SG&A
|
|
|
0.03
|
|
|
|
|
|
0.02
|
|
|
|
Per share impact of restructuring charges
|
|
|
0.00
|
|
|
|
|
|
0.02
|
|
|
|
Per share income tax impact of non-GAAP adjustments2
|
|
|
(0.01)
|
|
|
|
|
|
0.00
|
|
|
|
Non-GAAP diluted EPS
|
|
|
$0.62
|
|
|
|
|
|
$0.41
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
|
|
|
Nine Months Ended
|
|
|
|
October 29, 2016
|
|
|
October 31, 2015
|
|
|
|
$
|
|
|
% of Rev.
|
|
|
$
|
|
|
% of Rev.
|
Domestic - Continuing Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
$5,901
|
|
|
24.7%
|
|
|
$5,780
|
|
|
24.2%
|
CRT settlements3
|
|
|
(183)
|
|
|
(0.8%)
|
|
|
(88)
|
|
|
(0.4%)
|
Non-GAAP gross profit
|
|
|
$5,718
|
|
|
23.9%
|
|
|
$5,692
|
|
|
23.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SG&A
|
|
|
$4,915
|
|
|
20.6%
|
|
|
$4,922
|
|
|
20.6%
|
CRT settlements legal fees and costs3
|
|
|
(22)
|
|
|
(0.1%)
|
|
|
(13)
|
|
|
(0.1%)
|
Non-restructuring asset impairments - SG&A
|
|
|
(14)
|
|
|
(0.1%)
|
|
|
(31)
|
|
|
(0.1%)
|
Non-GAAP SG&A
|
|
|
$4,879
|
|
|
20.4%
|
|
|
$4,878
|
|
|
20.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
$959
|
|
|
4.0%
|
|
|
$857
|
|
|
3.6%
|
Net CRT settlements3
|
|
|
(161)
|
|
|
(0.7%)
|
|
|
(75)
|
|
|
(0.3%)
|
Non-restructuring asset impairments - SG&A
|
|
|
14
|
|
|
0.1%
|
|
|
31
|
|
|
0.1%
|
Restructuring charges
|
|
|
27
|
|
|
0.1%
|
|
|
1
|
|
|
0.0%
|
Non-GAAP operating income
|
|
|
$839
|
|
|
3.5%
|
|
|
$814
|
|
|
3.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International - Continuing Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
$509
|
|
|
25.3%
|
|
|
$460
|
|
|
22.5%
|
Restructuring charges - COGS
|
|
|
0
|
|
|
0.0%
|
|
|
4
|
|
|
0.2%
|
Non-GAAP gross profit
|
|
|
$509
|
|
|
25.3%
|
|
|
$464
|
|
|
22.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SG&A
|
|
|
$492
|
|
|
24.5%
|
|
|
$529
|
|
|
25.8%
|
Other Canada brand consolidation charges - SG&A1
|
|
|
(1)
|
|
|
(0.0%)
|
|
|
(6)
|
|
|
(0.3%)
|
Non-restructuring asset impairments - SG&A
|
|
|
(2)
|
|
|
(0.1%)
|
|
|
(3)
|
|
|
(0.1%)
|
Non-GAAP SG&A
|
|
|
$489
|
|
|
24.3%
|
|
|
$520
|
|
|
25.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
$14
|
|
|
0.7%
|
|
|
($253)
|
|
|
(12.4%)
|
Restructuring charges - COGS
|
|
|
0
|
|
|
0.0%
|
|
|
4
|
|
|
0.2%
|
Other Canada brand consolidation charges - SG&A1
|
|
|
1
|
|
|
0.0%
|
|
|
6
|
|
|
0.3%
|
Non-restructuring asset impairments - SG&A
|
|
|
2
|
|
|
0.1%
|
|
|
3
|
|
|
0.1%
|
Restructuring charges
|
|
|
3
|
|
|
0.1%
|
|
|
184
|
|
|
9.0%
|
Non-GAAP operating income (loss)
|
|
|
$20
|
|
|
1.0%
|
|
|
($56)
|
|
|
(2.7%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated - Continuing Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
$6,410
|
|
|
24.7%
|
|
|
$6,240
|
|
|
24.1%
|
CRT settlements3
|
|
|
(183)
|
|
|
(0.7%)
|
|
|
(88)
|
|
|
(0.3%)
|
Restructuring charges - COGS
|
|
|
0
|
|
|
0.0%
|
|
|
4
|
|
|
0.0%
|
Non-GAAP gross profit
|
|
|
$6,227
|
|
|
24.0%
|
|
|
$6,156
|
|
|
23.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SG&A
|
|
|
$5,407
|
|
|
20.9%
|
|
|
$5,451
|
|
|
21.0%
|
CRT settlements legal fees and costs3
|
|
|
(22)
|
|
|
(0.1%)
|
|
|
(13)
|
|
|
(0.1%)
|
Other Canada brand consolidation charges - SG&A1
|
|
|
(1)
|
|
|
(0.0%)
|
|
|
(6)
|
|
|
(0.0%)
|
Non-restructuring asset impairments - SG&A
|
|
|
(16)
|
|
|
(0.1%)
|
|
|
(34)
|
|
|
(0.1%)
|
Non-GAAP SG&A
|
|
|
$5,368
|
|
|
20.7%
|
|
|
$5,398
|
|
|
20.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
$973
|
|
|
3.8%
|
|
|
$604
|
|
|
2.3%
|
Net CRT settlements3
|
|
|
(161)
|
|
|
(0.6%)
|
|
|
(75)
|
|
|
(0.3%)
|
Restructuring charges - COGS
|
|
|
0
|
|
|
0.0%
|
|
|
4
|
|
|
0.0%
|
Other Canada brand consolidation charges - SG&A1
|
|
|
1
|
|
|
0.0%
|
|
|
6
|
|
|
0.0%
|
Non-restructuring asset impairments - SG&A
|
|
|
16
|
|
|
0.1%
|
|
|
34
|
|
|
0.1%
|
Restructuring charges
|
|
|
30
|
|
|
0.1%
|
|
|
185
|
|
|
0.7%
|
Non-GAAP operating income
|
|
|
$859
|
|
|
3.3%
|
|
|
$758
|
|
|
2.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
$343
|
|
|
|
|
|
$230
|
|
|
|
Effective tax rate
|
|
|
36.4%
|
|
|
|
|
|
41.1%
|
|
|
|
Income tax impact of non-GAAP adjustments2
|
|
|
(43)
|
|
|
|
|
|
33
|
|
|
|
Non-GAAP income tax expense
|
|
|
$300
|
|
|
|
|
|
$263
|
|
|
|
Non-GAAP effective tax rate
|
|
|
36.3%
|
|
|
|
|
|
36.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
|
|
|
$600
|
|
|
|
|
|
$330
|
|
|
|
Net CRT settlements3
|
|
|
(161)
|
|
|
|
|
|
(75)
|
|
|
|
Restructuring charges - COGS
|
|
|
0
|
|
|
|
|
|
4
|
|
|
|
Other Canada brand consolidation charges - SG&A1
|
|
|
1
|
|
|
|
|
|
6
|
|
|
|
Non-restructuring asset impairments - SG&A
|
|
|
16
|
|
|
|
|
|
34
|
|
|
|
Restructuring charges
|
|
|
30
|
|
|
|
|
|
185
|
|
|
|
Gain on investments
|
|
|
(2)
|
|
|
|
|
|
(2)
|
|
|
|
Income tax impact of non-GAAP adjustments2
|
|
|
43
|
|
|
|
|
|
(33)
|
|
|
|
Non-GAAP net earnings
|
|
|
$527
|
|
|
|
|
|
$449
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS
|
|
|
$1.85
|
|
|
|
|
|
$0.93
|
|
|
|
Per share impact of net CRT settlements3
|
|
|
(0.50)
|
|
|
|
|
|
(0.21)
|
|
|
|
Per share impact of restructuring charges - COGS
|
|
|
0.00
|
|
|
|
|
|
0.01
|
|
|
|
Per share impact of other Canada brand consolidation charges - SG&A1
|
|
|
0.01
|
|
|
|
|
|
0.02
|
|
|
|
Per share impact of non-restructuring asset impairments - SG&A
|
|
|
0.05
|
|
|
|
|
|
0.10
|
|
|
|
Per share impact of restructuring charges
|
|
|
0.09
|
|
|
|
|
|
0.52
|
|
|
|
Per share impact of gain on investments
|
|
|
(0.01)
|
|
|
|
|
|
(0.01)
|
|
|
|
Per share income tax impact of non-GAAP adjustments2
|
|
|
0.14
|
|
|
|
|
|
(0.09)
|
|
|
|
Non-GAAP diluted EPS
|
|
|
$1.63
|
|
|
|
|
|
$1.27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Represents charges related to the Canadian brand consolidation
initiated in Q1 FY16, primarily due to retention bonuses and other
store-related costs that were a direct result of the consolidation
but did not qualify as restructuring charges.
|
(2) Income tax impact of non-GAAP adjustments is the summation of
the calculated income tax charge related to each non-GAAP
non-income tax adjustment. The non-GAAP adjustments relate
primarily to adjustments in the United States and Canada. As such,
the income tax charge is calculated using the statutory tax rates
of 38% for the United States and 26.4% for Canada, applied to the
non-GAAP adjustments of each country, which are detailed in the
Domestic and International segment reconciliations above,
respectively.
|
(3) Represents cathode ray tube (CRT) litigation settlements
reached, net of related legal fees and costs. Settlements relate
to products purchased and sold in prior fiscal years. Refer to
Note 12, Contingencies and Commitments, in the Notes to
Consolidated Financial Statements included in the company’s Annual
Report on Form 10-K for the fiscal year ended January 30, 2016,
for additional information.
|
|
|
Return on Assets and Non-GAAP Return on
Invested Capital
|
|
|
|
|
|
|
|
The following table includes a reconciliation to the calculation
of return on total assets ("ROA") (GAAP financial measure), along
with the calculation of non-GAAP return on invested capital
(“ROIC”) for total operations, which includes both continuing and
discontinued operations (non-GAAP financial measure) for the
periods presented.
|
|
The company defines non-GAAP ROIC as non-GAAP net operating profit
after tax divided by average invested capital using the trailing
four-quarter average. The company believes non-GAAP ROIC is a
useful financial measure for investors in evaluating the
efficiency and effectiveness of the use of capital and believes
non-GAAP ROIC is an important component of shareholders' return
over the long term. This method of determining non-GAAP ROIC may
differ from other companies' methods and therefore may not be
comparable to those used by other companies.
|
|
Calculation of Return on Assets ("ROA")
|
|
|
|
October 29, 20161
|
|
|
October 31, 20151
|
Net earnings including noncontrolling interests
|
|
|
$
|
1,100
|
|
|
$
|
938
|
Total assets
|
|
|
|
13,554
|
|
|
|
14,429
|
ROA
|
|
|
|
8.1%
|
|
|
|
6.5%
|
|
|
|
|
|
|
|
Calculation of Non-GAAP Return on Invested Capital ("ROIC")
|
|
|
|
October 29, 20161
|
|
|
October 31, 20151
|
Net Operating Profit After Taxes (NOPAT)
|
|
|
|
|
|
|
Operating income - continuing operations
|
|
|
$
|
1,744
|
|
|
$
|
1,414
|
Operating income - discontinued operations
|
|
|
|
33
|
|
|
|
77
|
Total operating income
|
|
|
|
1,777
|
|
|
|
1,491
|
Add: Operating lease interest2
|
|
|
|
230
|
|
|
|
247
|
Add: Non-GAAP operating income adjustments3
|
|
|
|
(103)
|
|
|
|
176
|
Add: Investment income
|
|
|
|
28
|
|
|
|
21
|
Less: Net earnings attributable to noncontrolling interest
|
|
|
|
-
|
|
|
|
(1)
|
Less: Income taxes4
|
|
|
|
(729)
|
|
|
|
(725)
|
Non-GAAP NOPAT
|
|
|
$
|
1,203
|
|
|
$
|
1,209
|
|
|
|
|
|
|
|
Average Invested Capital
|
|
|
|
|
|
|
Total assets
|
|
|
$
|
13,554
|
|
|
$
|
14,429
|
Less: Excess cash5
|
|
|
|
(2,834)
|
|
|
|
(3,259)
|
Add: Capitalized operating lease obligations6
|
|
|
|
3,834
|
|
|
|
4,113
|
Total liabilities
|
|
|
|
(9,208)
|
|
|
|
(9,644)
|
Exclude: Debt7
|
|
|
|
1,466
|
|
|
|
1,619
|
Less: Noncontrolling interests
|
|
|
|
-
|
|
|
|
(1)
|
Average invested capital
|
|
|
$
|
6,812
|
|
|
$
|
7,257
|
|
|
|
|
|
|
|
Non-GAAP ROIC
|
|
|
|
17.7%
|
|
|
|
16.7%
|
|
|
|
|
|
|
|
(1) Income statement accounts represent the activity for the
trailing 12-months ended as of each of the balance sheet dates.
Balance sheet accounts represent the average account balances for
the four-quarters ended as of each of the balance sheet dates.
|
(2) Operating lease interest represents the add-back to operating
income to properly reflect the total interest expense that the
company would incur, if its operating leases were capitalized or
owned. The add-back is calculated by multiplying the trailing
12-month total rent expense by 30%. This multiple is used for the
retail sector by one of the nationally recognized credit rating
agencies that rates the company's credit worthiness, and the
company considers it to be an appropriate multiple for its lease
portfolio. Historically, the company has used an add-back multiple
of 50%; however, due to changes in the average remaining lease
life of the company's operating leases, the company has lowered
its multiple. The prior period calculations have been updated to
reflect the updated multiple.
|
(3) Includes continuing operations adjustments for net CRT
settlements, restructuring charges, other Canada brand
consolidation charges in SG&A and non-restructuring asset
impairments in SG&A and a discontinued operations adjustment for a
gain on a property sale. Additional details regarding the non-GAAP
operating income from continuing operations adjustments are
included in the "Reconciliation of Non-GAAP Financial Measures"
schedule. For additional details on the operating income from
discontinued operations adjustment, refer to Note 2, Discontinued
Operations, in the Notes to Consolidated Financial Statements
included in the company’s Form 10-Q for the fiscal quarter ended
July 30, 2016.
|
(4) Income taxes are calculated using a blended statutory rate at
the Enterprise level based on statutory rates from the countries
in which the company does business, which is primarily made up of
a 38% rate in the United States and a 26.4% rate in Canada.
|
(5) Cash and cash equivalents and short-term investments are
capped at the greater of 1% of revenue or actual amounts on hand.
The cash and cash equivalents and short-term investments in excess
of the cap are subtracted from the company’s calculation of
average invested capital to show their exclusion from total assets.
|
(6) Capitalized operating lease obligations represent the
estimated assets that we would record, if the company's operating
leases were capitalized or owned. The obligation is calculated by
multiplying the trailing 12-month total rent expense by the
multiple of five. This multiple is used for the retail sector by
one of the nationally recognized credit rating agencies that rates
the company's credit worthiness, and the company considers it to
be an appropriate multiple for its lease portfolio. Historically,
the company has used a capitalized lease obligation multiple of
eight; however, due to changes in the average remaining lease life
of the company's operating leases, the company has lowered its
multiples. The prior period calculations have been updated to
reflect the updated multiple.
|
(7) Debt includes short-term debt, current portion of long-term
debt and long-term debt and is added back to the company’s
calculation of average invested capital to show its exclusion from
total liabilities.
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20161117005271/en/
Source: Best Buy Co., Inc.