Comparable Sales Declined 4.8%
GAAP Diluted EPS of $2.12
Non-GAAP Diluted EPS of $2.72
Increasing Quarterly Dividend 2% to $0.94
per Share
Expects FY25 Non-GAAP Diluted EPS of $5.75
to $6.20
Best Buy Co., Inc. (NYSE: BBY) today announced results for the
14-week fourth quarter ended February 3, 2024 (“Q4 FY24”), as
compared to the 13-week fourth quarter ended January 28, 2023 (“Q4
FY23”).
Q4 FY24
Q4 FY23
FY24
FY23
(14 weeks)
(13 weeks)
(53 weeks)
(52 weeks)
Revenue ($ in millions)
Enterprise
$
14,646
$
14,735
$
43,452
$
46,298
Domestic segment
$
13,410
$
13,531
$
40,097
$
42,794
International segment
$
1,236
$
1,204
$
3,355
$
3,504
Enterprise comparable sales % change1
(4.8)
%
(9.3)
%
(6.8)
%
(9.9)
%
Domestic comparable sales % change1
(5.1)
%
(9.6)
%
(7.1)
%
(10.3)
%
Domestic comparable online sales %
change1
(4.8)
%
(13.0)
%
(7.8)
%
(13.5)
%
International comparable sales %
change1
(1.4)
%
(5.7)
%
(3.2)
%
(5.4)
%
Operating Income
GAAP operating income as a % of
revenue
3.8
%
4.1
%
3.6
%
3.9
%
Non-GAAP operating income as a % of
revenue
5.0
%
4.8
%
4.1
%
4.4
%
Diluted Earnings per Share
("EPS")
GAAP diluted EPS
$
2.12
$
2.23
$
5.68
$
6.29
Non-GAAP diluted EPS
$
2.72
$
2.61
$
6.37
$
7.08
For GAAP to non-GAAP reconciliations of the measures referred to
in the above table, please refer to the attached supporting
schedule.
“I’m proud of the performance of our teams across the company as
they showed resourcefulness, passion, and an unwavering focus on
our customers this past year,” said Corie Barry, Best Buy CEO. “In
the fourth quarter and throughout FY24, we demonstrated strong
operational execution as we navigated a pressured consumer
electronics sales environment. This allowed us to deliver annual
profitability at the high end of our original guidance range even
though sales came in below our original guidance range.
Importantly, we grew our paid membership base and drove customer
experience improvements in many areas of our business, particularly
in services and delivery.”
“As we enter FY25, we are energized about delivering on our
purpose to Enrich Lives through Technology in our vibrant, always
changing industry,” continued Barry. “In what we expect to be a
year of increasing industry sales stabilization, we are focused on
sharpening our customer experiences and industry positioning while
maintaining, if not expanding, our operating income rate on a
52-week basis.”
FY25 Financial Guidance
Note: FY25 has 52 weeks compared to 53 weeks in FY24. The
company estimates the impact of the extra week in FY24 added
approximately $735 million in revenue, approximately 15 basis
points of non-GAAP operating income rate, and approximately $0.30
of non-GAAP diluted EPS to the full year results.
Best Buy’s guidance for FY25 is the following:
- Revenue of $41.3 billion to $42.6 billion
- Comparable sales of (3.0%) to 0.0%
- Enterprise non-GAAP operating income rate2 of 3.9% to 4.1%
- Non-GAAP effective income tax rate2 of approximately 25.0%
- Non-GAAP diluted EPS2 of $5.75 to $6.20
- Capital expenditures of $750 to $800 million
“For FY25, we expect to expand our gross profit rate
approximately 20 to 30 basis points versus FY24 as we continue to
annualize the benefits of prior changes to our membership program,
partially offset by expected pressure coming from the profit share
on our credit card arrangement,” said Matt Bilunas, Best Buy CFO.
“At the high-end of our non-GAAP EPS guide, non-GAAP SG&A
expense2 is expected be similar to FY24.”
Bilunas continued, “For Q1 FY25, we expect comparable sales to
decline by approximately 5% and our non-GAAP operating income rate
to be approximately 3.4%, which is flat to Q1 FY24.”
Domestic Segment Q4 FY24
Results
Domestic Revenue
Domestic revenue of $13.41 billion decreased 0.9% versus last
year driven by a comparable sales decline of 5.1%, which was
partially offset by approximately $675 million of revenue from the
extra week.
From a merchandising perspective, the largest drivers of the
comparable sales decline on a weighted basis were home theater,
appliances, mobile phones and tablets. These drivers were partially
offset by growth in gaming.
Domestic online revenue of $5.10 billion decreased 4.8% on a
comparable basis, and as a percentage of total Domestic revenue,
online revenue was flat to last year at 38.0%.
Domestic Gross Profit Rate
Domestic gross profit rate was 20.4% versus 19.8% last year. The
higher gross profit rate was primarily due to improved financial
performance from the company’s membership offerings, which included
higher services margin rates, and an improved gross profit rate
from the company’s Health initiatives. These items were partially
offset by unfavorable product margin rates.
Domestic Selling, General and Administrative Expenses
(“SG&A”)
Domestic GAAP SG&A expenses were $2.07 billion, or 15.4% of
revenue, versus $2.07 billion, or 15.3% of revenue, last year. On a
non-GAAP basis, SG&A expenses were $2.06 billion, or 15.4% of
revenue, versus $2.05 billion, or 15.1% of revenue, last year. Both
GAAP and non-GAAP SG&A increased primarily due to the impact of
the extra week and higher incentive compensation. These increases
were partially offset by reduced store payroll and advertising
expense.
International Segment Q4 FY24
Results
International Revenue
International revenue of $1.24 billion increased 2.7% versus
last year. This increase was primarily driven by approximately $60
million of revenue from the extra week, which was partially offset
by a comparable sales decline of 1.4% and the negative impact from
foreign currency exchange rates.
International Gross Profit Rate
International gross profit rate was 21.0% versus 21.7% last
year. The lower gross profit rate was primarily due to unfavorable
product margin rates.
International SG&A
International SG&A expenses were $202 million, or 16.3% of
revenue, versus $189 million, or 15.7% of revenue, last year.
SG&A increased primarily due to higher incentive compensation
and the impact of the extra week.
Restructuring Charges
The company incurred $169 million of restructuring charges in Q4
FY24, primarily related to employee termination benefits associated
with an enterprise-wide restructuring initiative that commenced in
Q4 FY24. The restructuring initiative is intended to help the
company to: (1) align field labor resources with where customers
want to shop to optimize the customer experience; (2) redirect
corporate resources for better alignment with the company’s
strategy; and (3) right-size resources to better align with the
company’s revenue outlook for FY25.
The company expects approximately $10 million to $30 million of
additional charges in FY25 for this initiative and to pay up to
$135 million of the employee termination benefits during FY25, with
the remainder being paid in FY26. Consistent with prior practice,
restructuring charges are excluded from the company’s non-GAAP
results.
Share Repurchases and
Dividends
In Q4 FY24, the company returned a total of $268 million to
shareholders through dividends of $198 million and share
repurchases of $70 million. For the full year, the company returned
a total of $1.1 billion to shareholders through dividends of $801
million and share repurchases of $340 million.
Today, the company announced its board of directors approved a
2% increase in the regular quarterly dividend to $0.94 per share.
The regular quarterly dividend will be payable on April 11, 2024,
to shareholders of record as of the close of business on March 21,
2024.
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 February 29,
2024. A webcast of the call is expected to be available at
www.investors.bestbuy.com, both live and after the call.
Notes:
(1) The method of calculating comparable sales varies across the
retail industry. As a result, our method of calculating comparable
sales may not be the same as other retailers’ methods. 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.
Revenue for the 14-week Q4 FY24 and 53-week FY24 includes
approximately $675 million and $60 million related to our Domestic
and International segments, respectively, as a result of the extra
week in Q4 FY24. Comparable sales for the 14-week Q4 FY24 and
53-week FY24 exclude the impact of the extra week.
(2) A reconciliation of the projected non-GAAP operating income
rate, non-GAAP effective income tax rate, non-GAAP SG&A expense
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 and intangible asset
impairments; gains and losses on sales of subsidiaries and certain
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. You can identify these
statements by the fact that they use words such as "anticipate,"
“appear,” “approximate,” "assume," "believe," “continue,” “could,”
"estimate," "expect," “foresee,” "guidance," "intend," “may,”
“might,” "outlook," "plan," “possible,” "project" “seek,” “should,”
“would,” and other words and terms of similar meaning or the
negatives thereof. Such statements reflect our current views and
estimates with respect to future market conditions, company
performance and financial results, operational investments,
business prospects, our operating model, new strategies and growth
initiatives, the competitive environment, consumer behavior and
other events. These statements involve a number of judgments and
are subject to certain risks and uncertainties, many of which are
outside the control of the Company, that could cause actual results
to differ materially from the potential results discussed in such
forward-looking statements. Readers should review Item 1A, Risk
Factors, of our most recent Annual Report on Form 10-K, and any
updated information in subsequent Quarterly Reports on Form 10-Q,
for a description of important factors that could cause our actual
results to differ materially from those contemplated by the
forward-looking statements made in this release. Among the factors
that could cause actual results and outcomes to differ materially
from those contained in such forward-looking statements are the
following: macroeconomic pressures in the markets in which we
operate (including but not limited to inflation rates, fluctuations
in foreign currency exchange rates, limitations on a government’s
ability to borrow and/or spend capital, fluctuations in housing
prices, energy markets, and jobless rates and effects related to
the conflicts in Eastern Europe and the Middle East or other
geopolitical events); catastrophic events, health crises and
pandemics; susceptibility of the products we sell to technological
advancements, product life cycle fluctuations and changes in
consumer preferences; competition (including from multi-channel
retailers, e-commerce business, technology service providers,
traditional store-based retailers, vendors and mobile network
carriers and in the provision of delivery speed and options); our
ability to attract and retain qualified employees; changes in
market compensation rates; our expansion into health and new
products, services and technologies; our focus on services as a
strategic priority; our reliance on key vendors and mobile network
carriers (including product availability); our ability to maintain
positive brand perception and recognition; our ability to
effectively manage strategic ventures, alliances or acquisitions;
our ability to effectively manage our real estate portfolio;
inability of vendors or service providers to perform components our
supply chain (impacting our stores or other aspects of our
operations) and other various functions of our business; risks
arising from and potentially unique to our exclusive brands
products; our reliance on our information technology systems,
internet and telecommunications access and capabilities; our
ability to prevent or effectively respond to a cyber-attack,
privacy or security breach; product safety and quality concerns;
changes to labor or employment laws or regulations; risks arising
from statutory, regulatory and legal developments (including
statutes and/or regulations related to tax or privacy); evolving
corporate governance and public disclosure regulations and
expectations (including, but not limited to, cybersecurity and
environmental, social and governance matters); risks arising from
our international activities (including those related to the
conflicts in Eastern Europe and the Middle East or fluctuations in
foreign currency exchange rates) and those of our vendors; failure
to effectively manage our costs; our dependence on cash flows and
net earnings generated during the fourth fiscal quarter; pricing
investments and promotional activity; economic or regulatory
developments that might affect our ability to provide attractive
promotional financing; constraints in the capital markets; changes
to our vendor credit terms; changes in our credit ratings; failure
to meet financial-performance guidance or other forward-looking
statements; and general economic uncertainty in key global markets
and worsening of global economic conditions or low levels of
economic growth. We caution that the foregoing list of important
factors is not complete. Any forward-looking statements speak only
as of the date they are made and we assume no obligation to update
any forward-looking statement that we 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
February 3, 2024
January 28, 2023
February 3, 2024
January 28, 2023
Revenue
$
14,646
$
14,735
$
43,452
$
46,298
Cost of sales
11,645
11,795
33,849
36,386
Gross profit
3,001
2,940
9,603
9,912
Gross profit %
20.5
%
20.0
%
22.1
%
21.4
%
Selling, general and administrative
expenses
2,271
2,257
7,876
7,970
SG&A %
15.5
%
15.3
%
18.1
%
17.2
%
Restructuring charges
169
86
153
147
Operating income
561
597
1,574
1,795
Operating income %
3.8
%
4.1
%
3.6
%
3.9
%
Other income (expense):
Gain on sale of subsidiary, net
-
-
21
-
Investment income and other
37
26
78
28
Interest expense
(14)
(12)
(52)
(35)
Earnings before income tax expense and
equity in income of affiliates
584
611
1,621
1,788
Income tax expense
124
118
381
370
Effective tax rate
21.2
%
19.3
%
23.5
%
20.7
%
Equity in income of affiliates
-
2
1
1
Net earnings
$
460
$
495
$
1,241
$
1,419
Basic earnings per share
$
2.13
$
2.24
$
5.70
$
6.31
Diluted earnings per share
$
2.12
$
2.23
$
5.68
$
6.29
Weighted-average common shares
outstanding:
Basic
215.9
220.9
217.7
224.8
Diluted
216.8
221.8
218.5
225.7
BEST BUY CO., INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
($ in millions)
(Unaudited and subject to
reclassification)
February 3, 2024
January 28, 2023
Assets
Current assets:
Cash and cash equivalents
$
1,447
$
1,874
Receivables, net
939
1,141
Merchandise inventories
4,958
5,140
Other current assets
553
647
Total current assets
7,897
8,802
Property and equipment, net
2,260
2,352
Operating lease assets
2,758
2,746
Goodwill
1,383
1,383
Other assets
669
520
Total assets
$
14,967
$
15,803
Liabilities and equity
Current liabilities:
Accounts payable
$
4,637
$
5,687
Unredeemed gift card liabilities
253
274
Deferred revenue
1,000
1,116
Accrued compensation and related
expenses
486
405
Accrued liabilities
902
843
Current portion of operating lease
liabilities
618
638
Current portion of long-term debt
13
16
Total current liabilities
7,909
8,979
Long-term operating lease liabilities
2,199
2,164
Long-term debt
1,152
1,160
Long-term liabilities
654
705
Equity
3,053
2,795
Total liabilities and equity
$
14,967
$
15,803
BEST BUY CO., INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
($ in millions)
(Unaudited and subject to
reclassification)
Twelve Months Ended
February 3, 2024
January 28, 2023
Operating activities
Net earnings
$
1,241
$
1,419
Adjustments to reconcile net earnings to
total cash provided by operating activities:
Depreciation and amortization
923
918
Restructuring charges
153
147
Stock-based compensation
145
138
Deferred income taxes
(214)
51
Gain on sale of subsidiary, net
(21)
-
Other, net
26
12
Changes in operating assets and
liabilities:
Receivables
204
(103)
Merchandise inventories
178
809
Other assets
(18)
(21)
Accounts payable
(1,025)
(1,099)
Income taxes
52
36
Other liabilities
(174)
(483)
Total cash provided by operating
activities
1,470
1,824
Investing activities
Additions to property and equipment
(795)
(930)
Purchases of investments
(9)
(46)
Net proceeds from sale of subsidiary
14
-
Sales of investments
7
7
Other, net
2
7
Total cash used in investing
activities
(781)
(962)
Financing activities
Repurchase of common stock
(340)
(1,014)
Issuance of common stock
19
16
Dividends paid
(801)
(789)
Repayments of debt
(19)
(19)
Other, net
(3)
-
Total cash used in financing
activities
(1,144)
(1,806)
Effect of exchange rate changes on cash
and cash equivalents
(5)
(8)
Decrease in cash, cash equivalents and
restricted cash
(460)
(952)
Cash, cash equivalents and restricted
cash at beginning of period
2,253
3,205
Cash, cash equivalents and restricted
cash at end of period
$
1,793
$
2,253
BEST BUY CO., INC.
SEGMENT INFORMATION
($ in millions)
(Unaudited and subject to
reclassification)
Three Months Ended
Twelve Months Ended
Domestic Segment Results
February 3, 2024
January 28, 2023
February 3, 2024
January 28, 2023
Revenue
$
13,410
$
13,531
$
40,097
$
42,794
Comparable sales % change
(5.1)
%
(9.6)
%
(7.1)
%
(10.3)
%
Comparable online sales % change
(4.8)
%
(13.0)
%
(7.8)
%
(13.5)
%
Gross profit
$
2,742
$
2,679
$
8,850
$
9,106
Gross profit as a % of revenue
20.4
%
19.8
%
22.1
%
21.3
%
SG&A
$
2,069
$
2,068
$
7,236
$
7,332
SG&A as a % of revenue
15.4
%
15.3
%
18.0
%
17.1
%
Operating income
$
512
$
530
$
1,467
$
1,634
Operating income as a % of revenue
3.8
%
3.9
%
3.7
%
3.8
%
Domestic Segment Non-GAAP
Results1
Gross profit
$
2,742
$
2,679
$
8,850
$
9,106
Gross profit as a % of revenue
20.4
%
19.8
%
22.1
%
21.3
%
SG&A
$
2,064
$
2,047
$
7,175
$
7,246
SG&A as a % of revenue
15.4
%
15.1
%
17.9
%
16.9
%
Operating income
$
678
$
632
$
1,675
$
1,860
Operating income as a % of revenue
5.1
%
4.7
%
4.2
%
4.3
%
Three Months Ended
Twelve Months Ended
International Segment Results
February 3, 2024
January 28, 2023
February 3, 2024
January 28, 2023
Revenue
$
1,236
$
1,204
$
3,355
$
3,504
Comparable sales % change
(1.4)
%
(5.7)
%
(3.2)
%
(5.4)
%
Gross profit
$
259
$
261
$
753
$
806
Gross profit as a % of revenue
21.0
%
21.7
%
22.4
%
23.0
%
SG&A
$
202
$
189
$
640
$
638
SG&A as a % of revenue
16.3
%
15.7
%
19.1
%
18.2
%
Operating income
$
49
$
67
$
107
$
161
Operating income as a % of revenue
4.0
%
5.6
%
3.2
%
4.6
%
International Segment Non-GAAP
Results1
Gross profit
$
259
$
261
$
753
$
806
Gross profit as a % of revenue
21.0
%
21.7
%
22.4
%
23.0
%
SG&A
$
202
$
189
$
640
$
638
SG&A as a % of revenue
16.3
%
15.7
%
19.1
%
18.2
%
Operating income
$
57
$
72
$
113
$
168
Operating income as a % of revenue
4.6
%
6.0
%
3.4
%
4.8
%
(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
February 3, 2024
January 28, 2023
February 3, 2024
January 28, 2023
Computing and Mobile Phones
42
%
41
%
(4.2)
%
(10.0)
%
Consumer Electronics
31
%
33
%
(9.0)
%
(11.8)
%
Appliances
11
%
12
%
(13.7)
%
(13.2)
%
Entertainment
10
%
9
%
8.4
%
0.2
%
Services
5
%
5
%
6.3
%
12.4
%
Other
1
%
-
%
90.8
%
N/A
Total
100
%
100
%
(5.1)
%
(9.6)
%
Revenue Mix
Comparable Sales
Three Months Ended
Three Months Ended
International Segment
February 3, 2024
January 28, 2023
February 3, 2024
January 28, 2023
Computing and Mobile Phones
44
%
43
%
1.8
%
(0.5)
%
Consumer Electronics
31
%
33
%
(9.2)
%
(10.1)
%
Appliances
9
%
9
%
(4.1)
%
(2.5)
%
Entertainment
11
%
9
%
16.1
%
(10.5)
%
Services
4
%
4
%
7.7
%
(15.1)
%
Other
1
%
2
%
(38.8)
%
(6.2)
%
Total
100
%
100
%
(1.4)
%
(5.7)
%
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, goodwill and intangible asset impairments, price-fixing
settlements, gains and losses on sales of subsidiaries and certain
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
February 3, 2024
January 28, 2023
Domestic
International
Consolidated
Domestic
International
Consolidated
SG&A
$
2,069
$
202
$
2,271
$
2,068
$
189
$
2,257
% of revenue
15.4
%
16.3
%
15.5
%
15.3
%
15.7
%
15.3
%
Intangible asset amortization1
(5)
-
(5)
(21)
-
(21)
Non-GAAP SG&A
$
2,064
$
202
$
2,266
$
2,047
$
189
$
2,236
% of revenue
15.4
%
16.3
%
15.5
%
15.1
%
15.7
%
15.2
%
Operating income
$
512
$
49
$
561
$
530
$
67
$
597
% of revenue
3.8
%
4.0
%
3.8
%
3.9
%
5.6
%
4.1
%
Intangible asset amortization1
5
-
5
21
-
21
Restructuring charges2
161
8
169
81
5
86
Non-GAAP operating income
$
678
$
57
$
735
$
632
$
72
$
704
% of revenue
5.1
%
4.6
%
5.0
%
4.7
%
6.0
%
4.8
%
Effective tax rate
21.2
%
19.3
%
Intangible asset amortization1
-
%
0.1
%
Restructuring charges2
0.9
%
0.4
%
Non-GAAP effective tax rate
22.1
%
19.8
%
Three Months Ended
Three Months Ended
February 3, 2024
January 28, 2023
Pretax Earnings
Net of Tax4
Per Share
Pretax Earnings
Net of Tax4
Per Share
Diluted EPS
$
2.12
$
2.23
Intangible asset amortization1
$
5
$
3
0.02
$
21
$
16
0.08
Restructuring charges2
169
127
0.58
86
67
0.30
Non-GAAP diluted EPS
$
2.72
$
2.61
Twelve Months Ended
Twelve Months Ended
February 3, 2024
January 28, 2023
Domestic
International
Consolidated
Domestic
International
Consolidated
SG&A
$
7,236
$
640
$
7,876
$
7,332
$
638
$
7,970
% of revenue
18.0
%
19.1
%
18.1
%
17.1
%
18.2
%
17.2
%
Intangible asset amortization1
(61)
-
(61)
(86)
-
(86)
Non-GAAP SG&A
$
7,175
$
640
$
7,815
$
7,246
$
638
$
7,884
% of revenue
17.9
%
19.1
%
18.0
%
16.9
%
18.2
%
17.0
%
Operating income
$
1,467
$
107
$
1,574
$
1,634
$
161
$
1,795
% of revenue
3.7
%
3.2
%
3.6
%
3.8
%
4.6
%
3.9
%
Intangible asset amortization1
61
-
61
86
-
86
Restructuring charges2
147
6
153
140
7
147
Non-GAAP operating income
$
1,675
$
113
$
1,788
$
1,860
$
168
$
2,028
% of revenue
4.2
%
3.4
%
4.1
%
4.3
%
4.8
%
4.4
%
Effective tax rate
23.5
%
20.7
%
Intangible asset amortization1
0.1
%
0.1
%
Restructuring charges2
0.2
%
0.2
%
Non-GAAP effective tax rate
23.8
%
21.0
%
Twelve Months Ended
Twelve Months Ended
February 3, 2024
January 28, 2023
Pretax Earnings
Net of Tax4
Per Share
Pretax Earnings
Net of Tax4
Per Share
Diluted EPS
$
5.68
$
6.29
Intangible asset amortization1
$
61
$
46
0.21
$
86
$
65
0.29
Restructuring charges2
153
115
0.53
147
113
0.50
Loss on investments
11
11
0.05
-
-
-
Gain on sale of subsidiary, net3
(21)
(21)
(0.10)
-
-
-
Non-GAAP diluted EPS
$
6.37
$
7.08
(1)
Represents the non-cash amortization of
definite-lived intangible assets associated with acquisitions,
including customer relationships, tradenames and developed
technology assets.
(2)
Represents charges primarily related to
employee termination benefits associated with enterprise-wide
restructuring initiatives.
(3)
Represents the gain on sale of a Mexico
subsidiary subsequent to our exit from operations in Mexico.
(4)
The non-GAAP adjustments primarily relate
to the U.S. As such, the income tax charge on the U.S. non-GAAP
adjustments is calculated using the statutory tax rate of
24.5%.
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")
February 3, 20241
January 28, 20231
Net earnings
$
1,241
$
1,419
Total assets
15,888
16,490
ROA
7.8
%
8.6
%
Non-GAAP Return on Investment
("ROI")
February 3, 20241
January 28, 20231
Numerator
Operating income
$
1,574
$
1,795
Add: Non-GAAP operating income
adjustments2
214
233
Add: Operating lease interest3
113
113
Less: Income taxes4
(466)
(525)
Add: Depreciation
862
832
Add: Operating lease amortization5
661
661
Adjusted operating income after
tax
$
2,958
$
3,109
Denominator
Total assets
$
15,888
$
16,490
Less: Excess cash6
(258)
(270)
Add: Accumulated depreciation and
amortization7
5,122
5,375
Less: Adjusted current liabilities8
(8,389)
(9,143)
Average invested operating
assets
$
12,363
$
12,452
Non-GAAP ROI
23.9
%
25.0
%
(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
intangible asset amortization and restructuring charges. Additional
details regarding these adjustments are included in the
Reconciliation of Non-GAAP Financial Measures schedule within the
company’s earnings releases.
(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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240228409182/en/
Investor Contact: Mollie O'Brien
mollie.obrien@bestbuy.com
Media Contact: Carly Charlson
carly.charlson@bestbuy.com
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