- Q4 Comparable Sales Decreased 2.3% Compared to 12.6% Growth in
Q4 FY21
- Q4 GAAP Diluted EPS of $2.62
- Q4 Non-GAAP Diluted EPS of $2.73
- FY22 GAAP Operating Income Rate of 5.9%
- FY22 Non-GAAP Operating Income Rate of 6.0%
- Increased Quarterly Dividend 26% to $0.88 per Share
- Expects FY23 Non-GAAP Diluted EPS of $8.85 to $9.15
- Expects FY25 Revenue of $53.5 billion to $56.5 billion
- Expects FY25 Non-GAAP Operating Income Rate of 6.3% to
6.8%
Best Buy Co., Inc. (NYSE: BBY) today announced results for the
13-week fourth quarter ended January 29, 2022 (“Q4 FY22”), as
compared to the 13-week fourth quarter ended January 30, 2021 (“Q4
FY21”).
Q4 FY22
Q4 FY21
FY22
FY21
Revenue ($ in millions)
Enterprise
$
16,365
$
16,937
$
51,761
$
47,262
Domestic segment
$
14,993
$
15,400
$
47,830
$
43,293
International segment
$
1,372
$
1,537
$
3,931
$
3,969
Enterprise comparable sales % change1
(2.3
)
%
12.6
%
10.4
%
9.7
%
Domestic comparable sales % change1
(2.1
)
%
12.4
%
11.0
%
9.2
%
Domestic comparable online sales %
change1
(11.2
)
%
89.3
%
(12.0
)
%
144.4
%
International comparable sales %
change1
(3.8
)
%
14.9
%
3.3
%
15.0
%
Operating Income
GAAP operating income as a % of
revenue
4.9
%
6.1
%
5.9
%
5.1
%
Non-GAAP operating income as a % of
revenue
5.1
%
6.9
%
6.0
%
5.8
%
Diluted Earnings per Share
("EPS")
GAAP diluted EPS
$
2.62
$
3.10
$
9.84
$
6.84
Non-GAAP diluted EPS
$
2.73
$
3.48
$
10.01
$
7.91
For GAAP to non-GAAP reconciliations of the measures referred to
in the above table, please refer to the attached supporting
schedule.
“Our teams showed remarkable execution and dedication to serving
our customers throughout the important gift-giving season,” said
Corie Barry, Best Buy CEO. “In Q4, we drove improvement in
year-over-year customer satisfaction metrics across almost all
areas, particularly for in-store, online and chat experiences. And
even with online sales at almost 40% of our Domestic revenue, we
reached our fastest holiday delivery times ever, shipping products
to customer homes more than 25% faster than last year and two years
ago. I am truly grateful for, and continue to be impressed by, our
associates' dedication, resourcefulness and flat-out
determination.”
“Q4 sales of $16.4 billion were impacted by more constrained
inventory than expected, including some high-demand holiday items,
and the temporary reduction in store hours in January due to
Omicron-induced staffing challenges,” continued Barry. “We are
deliberately investing in our future and furthering our competitive
differentiation which, as expected, impacted our Q4 profitability.
The biggest areas of investment were our new membership program,
technology and Best Buy Health, all core to our future growth
potential.”
Barry continued, “FY22 was another record year. In addition to
record revenue and earnings, our leaders drove new ways of
operating and our employees worked tirelessly to meet our
customers’ technology needs with excellent service. From a
financial perspective, our comparable sales growth was 10.4% on top
of a very strong 9.7% last year, with revenue up $8.1 billion over
the past two years. Compared to last year, our GAAP EPS was up 44%
to $9.84 and our non-GAAP EPS was up 27% to $10.01.”
“In the past two years, our total cash provided by operating
activities was $8.2 billion and we generated more than $6.5 billion
in free cash flow,” said Matt Bilunas, Best Buy CFO. “In FY22, we
returned $4.2 billion to shareholders in the form of share
repurchases and dividends. Today, we are announcing a 26% increase
in our quarterly dividend to $0.88 per share and our plan to spend
approximately $1.5 billion in share repurchases in FY23.”
Financial Outlook
“In FY23, we are leveraging our position of strength by
continuing to invest in our future to deliver growth over the long
term. While we expect sales growth and earnings to look different
in FY23, our outlook for FY25 delivers strong revenue growth and
operating income rate expansion well beyond FY22,” Bilunas
continued. “The two largest variables in our FY23 financial outlook
on a year-over-year basis are the short-term industry decline as we
lap high growth and government stimulus, and the investment in our
new membership program, Best Buy Totaltech, which we believe will
drive longer-term value. As we look to FY25, we expect the consumer
electronics industry will return to the level we saw this past
year, which is much higher than pre-pandemic levels, and that
Totaltech, Best Buy Health and other initiatives will drive
meaningful growth.”
In conjunction with today’s earnings release, the company is
expected to host a combined earnings and investor update webcast at
8:00 a.m. Eastern Time during which members of the executive team
will discuss quarterly results, share updates on strategic
initiatives and provide more details on the following financial
targets:
FY23:
- Revenue of $49.3 billion to $50.8 billion
- Comparable sales decline of 1.0% to 4.0%
- Enterprise non-GAAP operating income rate2 of approximately
5.4%
- Non-GAAP effective income tax rate2 of approximately 24.5%
- Share repurchases of approximately $1.5 billion
- Non-GAAP diluted EPS2 of $8.85 to $9.15
FY25:
- Enterprise revenue of $53.5 billion to $56.5 billion
- Enterprise non-GAAP operating income rate2 of 6.3% to 6.8%
- Enterprise non-GAAP operating income2 of $3.4 billion to $3.8
billion
Domestic Segment Q4 FY22
Results
Domestic Revenue
Domestic revenue of $14.99 billion decreased 2.6% versus last
year. The decrease was primarily driven by a comparable sales
decline of 2.1% and the loss of revenue from permanent store
closures in the past year.
From a merchandising perspective, the largest drivers of
comparable sales growth on a weighted basis were appliances,
virtual reality, home theater and headphones. These growth drivers
were more than offset by declines in gaming, mobile phones, tablets
and services.
Domestic online revenue of $5.91 billion decreased 11.2% on a
comparable basis, and as a percentage of total Domestic revenue,
online revenue was approximately 39.4% versus 43.2% last year.
Domestic Gross Profit Rate
Domestic GAAP gross profit rate was 20.0% versus 20.9% last
year. On a non-GAAP basis, the gross profit rate was 20.0% versus
20.7% last year. The lower GAAP and non-GAAP gross profit rates
were primarily driven by lower services margin rates, including
pressure associated with the company’s new Totaltech membership
offering, which was partially offset by higher profit-sharing
revenue from the company’s private label and co-branded credit card
arrangement. The GAAP gross profit rate in FY21 also included the
benefit of a $21 million price-fixing settlement received in
relation to products purchased and sold in prior fiscal years.
Domestic Selling, General and Administrative Expenses
(“SG&A”)
Domestic GAAP SG&A was $2.30 billion, or 15.3% of revenue,
versus $2.15 billion, or 14.0% of revenue, last year. On a non-GAAP
basis, SG&A was $2.27 billion, or 15.1% of revenue, versus
$2.13 billion, or 13.8% of revenue, last year. Both GAAP and
non-GAAP SG&A increased primarily due to: (1) advertising
expense; (2) technology investments; (3) store and call center
labor; and (4) Best Buy Health.
International Segment Q4 FY22
Results
International Revenue
International revenue of $1.4 billion decreased 10.7% versus
last year. This decrease was primarily driven by the closure of
Mexico in FY22 and a comparable sales decline of 3.8% in Canada.
These items were partially offset by the benefit of approximately
150 basis points of favorable foreign currency exchange rates.
International Gross Profit Rate
International GAAP gross profit rate was 22.9% versus 21.6% last
year. On a non-GAAP basis, the gross profit rate was 22.9% versus
20.8% last year. The higher GAAP and non-GAAP gross profit rates
were primarily driven by sales mixing out of Mexico, which had a
lower gross profit rate than Canada, and a larger percentage of
revenue from the higher margin services category in Canada. The
GAAP gross profit rate in FY21 also included a $13 million benefit
associated with more favorable than expected inventory markdowns in
Mexico.
International SG&A
International SG&A was $206 million, or 15.0% of revenue,
versus $216 million, or 14.1% of revenue, last year. SG&A
decreased primarily due to the closure of Mexico, which was
partially offset by increased store payroll expense in Canada and
the impact of foreign exchange rates.
Dividends and Share
Repurchases
In Q4 FY22, the company returned a total of $1.94 billion to
shareholders through share repurchases of $1.77 billion and
dividends of $166 million. For the full year, the company returned
a total of $4.2 billion to shareholders through share repurchases
of $3.5 billion and dividends of $688 million.
Today, the company announced its board of directors approved a
26% increase in the regular quarterly dividend to $0.88 per share.
The regular quarterly dividend will be payable on April 14, 2022,
to shareholders of record as of the close of business on March 24,
2022.
In addition, the company’s board of directors approved a new
$5.0 billion share repurchase authorization, replacing the existing
authorization dated February 2021, which had $1.6 billion in
repurchases remaining at the end of FY22.
Combined Q4 FY22 Earnings and Investor
Update Webcast
Best Buy is scheduled to conduct a video webcast from 8:00 a.m.
to approximately 10:30 a.m. Eastern Time on March 3, 2022. Members
of the executive team will discuss the company’s quarterly results,
share updates on strategic initiatives and provide forward-looking
financial targets. Following the prepared remarks, the company will
host a virtual Q&A session. A video webcast of the event will
be available at www.investors.bestbuy.com, both live and after the
event.
Notes:
(1) Comparable sales include revenue from all stores that were
temporarily closed or operating an enhanced curbside-only operating
model as a result of COVID-19. The method of calculating comparable
sales varies across the retail industry, including the treatment of
store closures as a result of COVID-19. As a result, our method of
calculating comparable sales may not be the same as other
retailers’ methods. On November 24, 2020, the company announced its
decision to exit its operations in Mexico. As a result, all revenue
from Mexico operations has been excluded from the comparable sales
calculation beginning in fiscal December FY21. For additional
information on comparable sales, please see our most recent Annual
Report on Form 10-K, and our subsequent Quarterly Reports on Form
10-Q, filed with the Securities and Exchange Commission (“SEC”),
and available at www.investors.bestbuy.com.
(2) A reconciliation of the projected non-GAAP operating income,
non-GAAP operating income 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;
price-fixing settlements; goodwill impairments; gains and losses on
investments; intangible asset amortization; certain
acquisition-related costs; 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 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.
Forward-Looking and Cautionary Statements:
This 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, operational
investments, 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,” “foresee,” “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: the duration and
scope of the ongoing COVID-19 pandemic and its resurgence and the
impact on demand for our products and services, levels of consumer
confidence and our supply chain; the effects and duration of steps
we have taken and will continue to take in response to the
pandemic, including the implementation of our interim and evolving
operating model; actions governments, businesses and individuals
have taken and will continue to take in response to the pandemic
and their impact on economic activity and consumer spending; the
pace of recovery when the ongoing COVID-19 pandemic subsides;
general economic uncertainty in key global markets and a worsening
of global economic conditions or low levels of economic growth;
competition (including from multi-channel retailers, e-commerce
business, technology service providers, traditional store-based
retailers, vendors and mobile network carriers), our expansion
strategies, our focus on services as a strategic priority, our
reliance on key vendors and mobile network carriers, our ability to
attract and retain qualified employees, changes in market
compensation rates, risks arising from statutory, regulatory and
legal developments, macroeconomic pressures in the markets in which
we operate, failure to effectively manage our costs, our reliance
on our information technology systems, our ability to prevent or
effectively respond to a privacy or security breach, our ability to
effectively manage strategic ventures, alliances or acquisitions,
our dependence on cash flows and net earnings generated during the
fourth fiscal quarter, susceptibility of our products to
technological advancements, product life cycle preferences and
changes in consumer preferences, economic or regulatory
developments that might affect our ability to provide attractive
promotional financing, interruptions and other supply chain issues,
catastrophic events, health crises, pandemics, our ability to
maintain positive brand perception and recognition, product safety
and quality concerns, changes to labor or employment laws or
regulations, our ability to effectively manage our real estate
portfolio, constraints in the capital markets or our vendor credit
terms, changes in our credit ratings, any material disruption in
our relationship with or the services of third-party vendors, risks
related to our exclusive brand products and risks associated with
vendors that source products outside of the U.S., including trade
restrictions or changes in the costs of imports (including existing
or new tariffs or duties and changes in the amount of any such
tariffs or duties) and risks arising from our international
activities.
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 SEC, including, but not
limited to, Best Buy’s Annual Report on Form 10-K filed with the
SEC on March 19, 2021 and its Quarterly Reports on Form 10-Q filed
with the SEC. 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.
BEST BUY CO., INC.
CONDENSED CONSOLIDATED
STATEMENTS OF EARNINGS
($ and shares in millions, except
per share amounts)
(Unaudited and subject to
reclassification)
Three Months Ended
Twelve Months Ended
January 29, 2022
January 30, 2021
January 29, 2022
January 30, 2021
Revenue
$
16,365
$
16,937
$
51,761
$
47,262
Cost of sales
13,052
13,394
40,121
36,689
Gross profit
3,313
3,543
11,640
10,573
Gross profit %
20.2
%
20.9
%
22.5
%
22.4
%
Selling, general and administrative
expenses
2,505
2,368
8,635
7,928
SG&A %
15.3
%
14.0
%
16.7
%
16.8
%
Restructuring charges
5
142
(34
)
254
Operating income
803
1,033
3,039
2,391
Operating income %
4.9
%
6.1
%
5.9
%
5.1
%
Other income (expense):
Gain on sale of investments
-
1
-
1
Investment income and other
3
18
10
37
Interest expense
(6
)
(9
)
(25
)
(52
)
Earnings before income tax expense
800
1,043
3,024
2,377
Income tax expense
172
227
574
579
Effective tax rate
21.4
%
21.6
%
19.0
%
24.3
%
Equity in income (loss) of affiliates
(2
)
-
4
-
Net earnings
$
626
$
816
$
2,454
$
1,798
Basic earnings per share
$
2.65
$
3.15
$
9.94
$
6.93
Diluted earnings per share
$
2.62
$
3.10
$
9.84
$
6.84
Weighted-average common shares
outstanding:
Basic
236.6
259.4
246.8
259.6
Diluted
239.0
263.2
249.3
263.0
BEST BUY CO., INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
($ in millions)
(Unaudited and subject to
reclassification)
January 29, 2022
January 30, 2021
Assets
Current assets:
Cash and cash equivalents
$
2,936
$
5,494
Receivables, net
1,042
1,061
Merchandise inventories
5,965
5,612
Other current assets
596
373
Total current assets
10,539
12,540
Property and equipment, net
2,250
2,260
Operating lease assets
2,654
2,612
Goodwill
1,384
986
Other assets
677
669
Total assets
$
17,504
$
19,067
Liabilities and equity
Current liabilities:
Accounts payable
$
6,803
$
6,979
Unredeemed gift card liabilities
316
317
Deferred revenue
1,103
711
Accrued compensation and related
expenses
845
725
Accrued liabilities
946
972
Short-term debt
-
110
Current portion of operating lease
liabilities
648
693
Current portion of long-term debt
13
14
Total current liabilities
10,674
10,521
Long-term operating lease liabilities
2,061
2,012
Long-term liabilities
533
694
Long-term debt
1,216
1,253
Equity
3,020
4,587
Total liabilities and equity
$
17,504
$
19,067
BEST BUY CO., INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
($ in millions)
(Unaudited and subject to
reclassification)
Twelve Months Ended
January 29, 2022
January 30, 2021
Operating activities
Net earnings
$
2,454
$
1,798
Adjustments to reconcile net earnings to
total cash provided by operating activities:
Depreciation and amortization
869
839
Restructuring charges
(34
)
254
Stock-based compensation
141
135
Deferred income taxes
14
(36
)
Other, net
11
3
Changes in operating assets and
liabilities, net of acquired assets and liabilities:
Receivables
17
73
Merchandise inventories
(328
)
(435
)
Other assets
(14
)
(51
)
Accounts payable
(201
)
1,676
Income taxes
(156
)
173
Other liabilities
479
498
Total cash provided by operating
activities
3,252
4,927
Investing activities
Additions to property and equipment
(737
)
(713
)
Purchases of investments
(233
)
(620
)
Sales of investments
66
546
Acquisitions, net of cash acquired
(468
)
-
Other, net
-
(1
)
Total cash used in investing
activities
(1,372
)
(788
)
Financing activities
Repurchase of common stock
(3,502
)
(312
)
Issuance of common stock
29
28
Dividends paid
(688
)
(568
)
Borrowings of debt
-
1,892
Repayments of debt
(133
)
(1,916
)
Other, net
(3
)
-
Total cash used in financing
activities
(4,297
)
(876
)
Effect of exchange rate changes on cash
and cash equivalents
(3
)
7
Increase (decrease) in cash, cash
equivalents and restricted cash
(2,420
)
3,270
Cash, cash equivalents and restricted
cash at beginning of period
5,625
2,355
Cash, cash equivalents and restricted
cash at end of period
$
3,205
$
5,625
BEST BUY CO., INC.
SEGMENT INFORMATION
($ in millions)
(Unaudited and subject to
reclassification)
Three Months Ended
Twelve Months Ended
Domestic Segment Results
January 29, 2022
January 30, 2021
January 29, 2022
January 30, 2021
Revenue
$
14,993
$
15,400
$
47,830
$
43,293
Comparable sales % change
(2.1
)
%
12.4
%
11.0
%
9.2
%
Comparable online sales % change
(11.2
)
%
89.3
%
(12.0
)
%
144.4
%
Gross profit
$
2,999
$
3,211
$
10,702
$
9,720
Gross profit as a % of revenue
20.0
%
20.9
%
22.4
%
22.5
%
SG&A
$
2,299
$
2,152
$
7,946
$
7,239
SG&A as a % of revenue
15.3
%
14.0
%
16.6
%
16.7
%
Operating income
$
695
$
971
$
2,795
$
2,348
Operating income as a % of revenue
4.6
%
6.3
%
5.8
%
5.4
%
Domestic Segment Non-GAAP
Results1
Gross profit
$
2,999
$
3,190
$
10,702
$
9,699
Gross profit as a % of revenue
20.0
%
20.7
%
22.4
%
22.4
%
SG&A
$
2,271
$
2,132
$
7,853
$
7,159
SG&A as a % of revenue
15.1
%
13.8
%
16.4
%
16.5
%
Operating income
$
728
$
1,058
$
2,849
$
2,540
Operating income as a % of revenue
4.9
%
6.9
%
6.0
%
5.9
%
Three Months Ended
Twelve Months Ended
International Segment Results
January 29, 2022
January 30, 2021
January 29, 2022
January 30, 2021
Revenue
$
1,372
$
1,537
$
3,931
$
3,969
Comparable sales % change
(3.8
)
%
14.9
%
3.3
%
15.0
%
Gross profit
$
314
$
332
$
938
$
853
Gross profit as a % of revenue
22.9
%
21.6
%
23.9
%
21.5
%
SG&A
$
206
$
216
$
689
$
689
SG&A as a % of revenue
15.0
%
14.1
%
17.5
%
17.4
%
Operating income
$
108
$
62
$
244
$
43
Operating income as a % of revenue
7.9
%
4.0
%
6.2
%
1.1
%
International Segment Non-GAAP
Results1
Gross profit
$
314
$
319
$
932
$
876
Gross profit as a % of revenue
22.9
%
20.8
%
23.7
%
22.1
%
SG&A
$
206
$
216
$
689
$
689
SG&A as a % of revenue
15.0
%
14.1
%
17.5
%
17.4
%
Operating income
$
108
$
103
$
243
$
187
Operating income as a % of revenue
7.9
%
6.7
%
6.2
%
4.7
%
(1) For GAAP to non-GAAP reconciliations,
please refer to the attached supporting schedule titled
Reconciliation of Non-GAAP Financial Measures.
BEST BUY CO., INC.
REVENUE CATEGORY
SUMMARY
(Unaudited and subject to
reclassification)
Revenue Mix
Comparable Sales
Three Months Ended
Three Months Ended
Domestic Segment
January 29, 2022
January 30, 2021
January 29, 2022
January 30, 2021
Computing and Mobile Phones
42
%
43
%
(6.0
)
%
16.4
%
Consumer Electronics
34
%
32
%
2.9
%
(1.3
)
%
Appliances
13
%
12
%
7.9
%
36.0
%
Entertainment
8
%
9
%
(9.5
)
%
31.4
%
Services
3
%
4
%
(14.8
)
%
4.9
%
Other
-
%
-
%
N/A
N/A
Total
100
%
100
%
(2.1
)
%
12.4
%
Revenue Mix
Comparable Sales
Three Months Ended
Three Months Ended
International Segment
January 29, 2022
January 30, 2021
January 29, 2022
January 30, 2021
Computing and Mobile Phones
40
%
42
%
(6.0
)
%
20.5
%
Consumer Electronics
35
%
34
%
(3.8
)
%
2.4
%
Appliances
9
%
9
%
(1.2
)
%
26.8
%
Entertainment
10
%
10
%
(6.9
)
%
59.5
%
Services
4
%
3
%
23.0
%
(18.0
)
%
Other
2
%
2
%
2.8
%
6.5
%
Total
100
%
100
%
(3.8
)
%
14.9
%
BEST BUY CO., INC.
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES
($ in millions, except per share
amounts)
(Unaudited and subject to
reclassification)
The following information provides
reconciliations of the most comparable financial measures presented
in accordance with accounting principles generally accepted in the
U.S. (GAAP financial measures) 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
financial measures. Generally, presented non-GAAP financial
measures include adjustments for items such as restructuring
charges, price-fixing settlements, goodwill impairments, gains and
losses on investments, intangible asset amortization, certain
acquisition-related costs and the tax effect of all such items. 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 financial measures as
presented herein may not be comparable to similarly titled measures
used by other companies.
Three Months Ended
Three Months Ended
January 29, 2022
January 30, 2021
Domestic
International
Consolidated
Domestic
International
Consolidated
Gross profit
$
2,999
$
314
$
3,313
$
3,211
$
332
$
3,543
% of revenue
20.0
%
22.9
%
20.2
%
20.9
%
21.6
%
20.9
%
Restructuring - inventory markdowns1
-
-
-
-
(13
)
(13
)
Price-fixing settlement2
-
-
-
(21
)
-
(21
)
Non-GAAP gross profit
$
2,999
$
314
$
3,313
$
3,190
$
319
$
3,509
% of revenue
20.0
%
22.9
%
20.2
%
20.7
%
20.8
%
20.7
%
SG&A
$
2,299
$
206
$
2,505
$
2,152
$
216
$
2,368
% of revenue
15.3
%
15.0
%
15.3
%
14.0
%
14.1
%
14.0
%
Intangible asset amortization3
(22
)
-
(22
)
(20
)
-
(20
)
Acquisition-related transaction costs3
(6
)
-
(6
)
-
-
-
Non-GAAP SG&A
$
2,271
$
206
$
2,477
$
2,132
$
216
$
2,348
% of revenue
15.1
%
15.0
%
15.1
%
13.8
%
14.1
%
13.9
%
Operating income
$
695
$
108
$
803
$
971
$
62
$
1,033
% of revenue
4.6
%
7.9
%
4.9
%
6.3
%
4.0
%
6.1
%
Restructuring - inventory markdowns1
-
-
-
-
(13
)
(13
)
Price-fixing settlement2
-
-
-
(21
)
-
(21
)
Intangible asset amortization3
22
-
22
20
-
20
Acquisition-related transaction costs3
6
-
6
-
-
-
Restructuring charges4
5
-
5
88
54
142
Non-GAAP operating income
$
728
$
108
$
836
$
1,058
$
103
$
1,161
% of revenue
4.9
%
7.9
%
5.1
%
6.9
%
6.7
%
6.9
%
Effective tax rate
21.4
%
21.6
%
Price-fixing settlement2
-
%
0.2
%
Intangible asset amortization3
-
%
(0.1
)
%
Restructuring charges4
-
%
(0.8
)
%
Gain on investments, net
-
%
0.1
%
Non-GAAP effective tax rate
21.4
%
21.0
%
Three Months Ended
Three Months Ended
January 29, 2022
January 30, 2021
Pretax Earnings
Net of Tax5
Per Share
Pretax Earnings
Net of Tax5
Per Share
Diluted EPS
$
2.62
$
3.10
Restructuring - inventory markdowns1
$
-
$
-
-
$
(13
)
$
(13
)
(0.05
)
Price-fixing settlement2
-
-
-
(21
)
(15
)
(0.06
)
Intangible asset amortization3
22
18
0.08
20
15
0.06
Acquisition-related transaction costs3
6
5
0.02
-
-
-
Restructuring charges4
5
3
0.01
142
121
0.46
Gain on investments, net
-
-
-
(12
)
(9
)
(0.03
)
Non-GAAP diluted EPS
$
2.73
$
3.48
Twelve Months Ended
Twelve Months Ended
January 29, 2022
January 30, 2021
Domestic
International
Consolidated
Domestic
International
Consolidated
Gross profit
$
10,702
$
938
$
11,640
$
9,720
$
853
$
10,573
% of revenue
22.4
%
23.9
%
22.5
%
22.5
%
21.5
%
22.4
%
Restructuring - inventory markdowns1
-
(6
)
(6
)
-
23
23
Price-fixing settlement2
-
-
-
(21
)
-
(21
)
Non-GAAP gross profit
$
10,702
$
932
$
11,634
$
9,699
$
876
$
10,575
% of revenue
22.4
%
23.7
%
22.5
%
22.4
%
22.1
%
22.4
%
SG&A
$
7,946
$
689
$
8,635
$
7,239
$
689
$
7,928
% of revenue
16.6
%
17.5
%
16.7
%
16.7
%
17.4
%
16.8
%
Intangible asset amortization3
(82
)
-
(82
)
(80
)
-
(80
)
Acquisition-related transaction costs3
(11
)
-
(11
)
-
-
-
Non-GAAP SG&A
$
7,853
$
689
$
8,542
$
7,159
$
689
$
7,848
% of revenue
16.4
%
17.5
%
16.5
%
16.5
%
17.4
%
16.6
%
Operating income
$
2,795
$
244
$
3,039
$
2,348
$
43
$
2,391
% of revenue
5.8
%
6.2
%
5.9
%
5.4
%
1.1
%
5.1
%
Restructuring - inventory markdowns1
-
(6
)
(6
)
-
23
23
Price-fixing settlement2
-
-
-
(21
)
-
(21
)
Intangible asset amortization3
82
-
82
80
-
80
Acquisition-related transaction costs3
11
-
11
-
-
-
Restructuring charges4
(39
)
5
(34
)
133
121
254
Non-GAAP operating income
$
2,849
$
243
$
3,092
$
2,540
$
187
$
2,727
% of revenue
6.0
%
6.2
%
6.0
%
5.9
%
4.7
%
5.8
%
Effective tax rate
19.0
%
24.3
%
Price-fixing settlement2
-
%
0.2
%
Intangible asset amortization3
0.1
%
(0.6
)
%
Restructuring charges4
(0.1
)
%
(1.0
)
%
Gain on investments, net
-
%
0.1
%
Non-GAAP effective tax rate
19.0
%
23.0
%
Twelve Months Ended
Twelve Months Ended
January 29, 2022
January 30, 2021
Pretax Earnings
Net of Tax5
Per Share
Pretax Earnings
Net of Tax5
Per Share
Diluted EPS
$
9.84
$
6.84
Restructuring - inventory markdowns1
$
(6
)
$
(6
)
(0.02
)
$
23
$
23
0.09
Price-fixing settlement2
-
-
-
(21
)
(15
)
(0.06
)
Intangible asset amortization3
82
62
0.25
80
60
0.23
Acquisition-related transaction costs3
11
10
0.04
-
-
-
Restructuring charges4
(34
)
(24
)
(0.10
)
254
222
0.84
Gain on investments, net
-
-
-
(12
)
(9
)
(0.03
)
Non-GAAP diluted EPS
$
10.01
$
7.91
(1)
Represents inventory markdown adjustments
recorded within cost of sales associated with the decision to exit
operations in Mexico.
(2)
Represents a price-fixing litigation
settlement received in relation to products purchased and sold in
prior fiscal years.
(3)
Represents charges associated with
acquisitions, including: (1) the non-cash amortization of
definite-lived intangible assets, including customer relationships,
tradenames and developed technology; and (2) acquisition-related
transaction and due diligence costs, primarily comprised of
professional fees.
(4)
Represents charges and subsequent
adjustments primarily related to actions taken in the Domestic
segment to better align the company’s organizational structure with
its strategic focus and the decision to exit operations in Mexico
in the International segment.
(5)
The non-GAAP adjustments primarily relate
to the U.S. and Mexico. As such, the income tax charge is generally
calculated using the statutory tax rate of 24.5% for U.S. non-GAAP
items for all periods presented. There is no income tax charge for
Mexico non-GAAP items and a minimal amount of U.S. non-GAAP items,
as there was no tax benefit recognized on these expenses in the
calculation of GAAP income tax expense.
Return
on Assets and Non-GAAP Return on Investment
The tables below provide calculations of
return on assets ("ROA") (GAAP financial measure) and non-GAAP
return on investment (“ROI”) (non-GAAP financial measure) for the
periods presented. The company believes ROA is the most directly
comparable financial measure to ROI. Non-GAAP ROI is defined as
non-GAAP adjusted operating income after tax divided by average
invested operating assets. All periods presented below apply this
methodology consistently. The company believes non-GAAP ROI is a
meaningful metric for investors to evaluate capital efficiency
because it measures how key assets are deployed by adjusting
operating income and total assets for the items noted below. This
method of determining non-GAAP ROI may differ from other companies'
methods and therefore may not be comparable to those used by other
companies.
Return on Assets ("ROA")
January 29, 20221
January 30, 20211
Net earnings
$
2,454
$
1,798
Total assets
18,743
18,408
ROA
13.1
%
9.8
%
Non-GAAP Return on Investment
("ROI")
January 29, 20221
January 30, 20211
Numerator
Operating income
$
3,039
$
2,391
Add: Non-GAAP operating income
adjustments2
53
336
Add: Operating lease interest3
108
111
Less: Income taxes4
(784
)
(695
)
Add: Depreciation
787
759
Add: Operating lease amortization5
657
665
Adjusted operating income after
tax
$
3,860
$
3,567
Denominator
Total assets
$
18,743
$
18,408
Less: Excess cash6
(3,055
)
(4,071
)
Add: Accumulated depreciation and
amortization7
6,957
7,114
Less: Adjusted current liabilities8
(10,122
)
(9,189
)
Average invested operating
assets
$
12,523
$
12,262
Non-GAAP ROI
30.8
%
29.1
%
(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 trailing 12 months ended as of each of the balance
sheet dates.
(2)
Non-GAAP operating income adjustments
include continuing operations adjustments for restructuring
charges, intangible asset amortization, acquisition-related
transaction costs and price-fixing settlements. Additional details
regarding these adjustments are included in the Reconciliation of
Non-GAAP Financial Measures schedule in this earnings release.
(3)
Operating lease interest represents the
add-back to operating income to approximate the total interest
expense that the company would incur if its operating leases were
owned and financed by debt. The add-back is approximated by
multiplying average operating lease assets by 4%, which
approximates the interest rate on the company’s operating lease
liabilities.
(4)
Income taxes are approximated by using a
blended statutory rate at the Enterprise level based on statutory
rates from the countries in which the company does business, which
primarily consists of the U.S. with a statutory rate of 24.5% for
the periods presented.
(5)
Operating lease amortization represents
operating lease cost less operating lease interest. Operating lease
cost includes short-term leases, which are immaterial, and excludes
variable lease costs as these costs are not included in the
operating lease asset balance.
(6)
Excess cash represents the amount of cash,
cash equivalents and short-term investments greater than $1
billion, which approximates the amount of cash the company believes
is necessary to run the business and may fluctuate over time.
(7)
Accumulated depreciation and amortization
represents accumulated depreciation related to property and
equipment and accumulated amortization related to definite-lived
intangible assets.
(8)
Adjusted current liabilities represent
total current liabilities less short-term debt and the current
portions of operating lease liabilities and long-term debt.
Free
Cash Flow
($ in millions)
(Unaudited and subject to
reclassification)
The table below provides a reconciliation
of cash provided by operating activities (GAAP financial measure)
to free cash flow (non-GAAP financial measure) for the periods
presented. The company believes free cash flow, which measures our
ability to generate additional cash from our ongoing business
operations, is a relevant supplementary measure for investors in
evaluating the company’s financial performance. In addition, it is
one factor used by the company in determining the amount of cash
available for acquisitions, dividends, share repurchases and other
discretionary investments. This method of determining free cash
flow may differ from other companies' methods and therefore may not
be comparable to those used by other companies.
Twelve Months Ended
January 29, 2022
January 30, 2021
Cash provided by operating activities
$
3,252
$
4,927
Less: Additions to property and equipment,
net
(737
)
(713
)
Free cash flow
$
2,515
$
4,214
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220302005911/en/
Investor Contact: Mollie O'Brien
mollie.obrien@bestbuy.com
Media Contact: Carly Charlson
carly.charlson@bestbuy.com
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