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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 29, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from            to            

Commission File Number: 1-9595

 Picture 1

BEST BUY CO., INC.

(Exact name of registrant as specified in its charter)

Minnesota

41-0907483

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

7601 Penn Avenue South

Richfield, Minnesota

55423

(Address of principal executive offices)

(Zip Code)

(612) 291-1000

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of exchange on which registered

Common Stock, $0.10 par value per share

BBY

New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.      Yes  No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).      Yes  No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

Accelerated Filer

Non-accelerated Filer

Smaller Reporting Company

Emerging Growth Company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes  No 

The registrant had 221,264,454 shares of common stock outstanding as of December 2, 2022. 


BEST BUY CO., INC.

FORM 10-Q FOR THE QUARTER ENDED OCTOBER 29, 2022

TABLE OF CONTENTS

Part I — Financial Information

3

Item 1.

Financial Statements

3

a)

Condensed Consolidated Balance Sheets as of October 29, 2022, January 29, 2022, and October 30, 2021

3

b)

Condensed Consolidated Statements of Earnings for the three and nine months ended October 29, 2022, and October 30, 2021

4

c)

Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended October 29, 2022, and October 30, 2021

5

d)

Condensed Consolidated Statements of Cash Flows for the nine months ended October 29, 2022, and October 30, 2021

6

e)

Condensed Consolidated Statements of Changes in Shareholders' Equity for the three and nine months ended October 29, 2022, and October 30, 2021

7

f)

Notes to Condensed Consolidated Financial Statements

8

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

14

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

23

Item 4.

Controls and Procedures

23

Part II — Other Information

24

Item 1.

Legal Proceedings

24

Item 6.

Exhibits

24

Signatures

25

 

PART I — FINANCIAL INFORMATION

 

Item 1.    Financial Statements

 

Condensed Consolidated Balance Sheets

$ in millions, except per share amounts (unaudited)

October 29, 2022

January 29, 2022

October 30, 2021

Assets

Current assets

Cash and cash equivalents

$

932 

$

2,936 

$

3,465 

Receivables, net

1,050 

1,042 

1,016 

Merchandise inventories

7,294 

5,965 

8,553 

Other current assets

646 

596 

486 

Total current assets

9,922 

10,539 

13,520 

Property and equipment, net

2,373 

2,250 

2,256 

Operating lease assets

2,799 

2,654 

2,688 

Goodwill

1,383 

1,384 

986 

Other assets

544 

677 

652 

Total assets

$

17,021 

$

17,504 

$

20,102 

Liabilities and equity

Current liabilities

Accounts payable

$

7,056 

$

6,803 

$

8,405 

Unredeemed gift card liabilities

273 

316 

306 

Deferred revenue

1,080 

1,103 

977 

Accrued compensation and related expenses

363 

845 

703 

Accrued liabilities

744 

946 

895 

Current portion of operating lease liabilities

638 

648 

645 

Current portion of long-term debt

16 

13 

15 

Total current liabilities

10,170 

10,674 

11,946 

Long-term operating lease liabilities

2,216 

2,061 

2,102 

Long-term debt

1,142 

1,216 

1,223 

Long-term liabilities

500 

533 

553 

Contingencies (Note 11)

 

 

 

Equity

Preferred stock, $1.00 par value: Authorized - 400,000 shares; Issued and outstanding - none

-

-

-

Common stock, $0.10 par value: Authorized - 1.0 billion shares; Issued and outstanding - 225.2 million, 227.4 million and 243.8 million shares, respectively

22 

23 

24 

Additional paid-in capital

61 

-

-

Retained earnings

2,597 

2,668 

3,917 

Accumulated other comprehensive income

313 

329 

337 

Total equity

2,993 

3,020 

4,278 

Total liabilities and equity

$

17,021 

$

17,504 

$

20,102 

NOTE: The Consolidated Balance Sheet as of January 29, 2022, has been condensed from the audited consolidated financial statements.

See Notes to Condensed Consolidated Financial Statements. 


Condensed Consolidated Statements of Earnings

$ and shares in millions, except per share amounts (unaudited)

Three Months Ended

Nine Months Ended

October 29, 2022

October 30, 2021

October 29, 2022

October 30, 2021

Revenue

$

10,587 

$

11,910 

$

31,563 

$

35,396 

Cost of sales

8,255 

9,108 

24,591 

27,069 

Gross profit

2,332 

2,802 

6,972 

8,327 

Selling, general and administrative expenses

1,941 

2,133 

5,713 

6,130 

Restructuring charges

26 

(1)

61 

(39)

Operating income

365 

670 

1,198 

2,236 

Other income (expense):

Investment income and other

4 

1 

2 

7 

Interest expense

(10)

(7)

(23)

(19)

Earnings before income tax expense and equity in income (loss) of affiliates

359 

664 

1,177 

2,224 

Income tax expense

84 

166 

252 

402 

Equity in income (loss) of affiliates

2 

1 

(1)

6 

Net earnings

$

277 

$

499 

$

924 

$

1,828 

Basic earnings per share

$

1.23 

$

2.02 

$

4.09 

$

7.31 

Diluted earnings per share

$

1.22 

$

2.00 

$

4.07 

$

7.23 

Weighted-average common shares outstanding:

Basic

225.5 

246.4 

225.9 

249.9 

Diluted

226.2 

249.1 

226.9 

252.9 

See Notes to Condensed Consolidated Financial Statements.

 

Condensed Consolidated Statements of Comprehensive Income

$ in millions (unaudited)

Three Months Ended

Nine Months Ended

October 29, 2022

October 30, 2021

October 29, 2022

October 30, 2021

Net earnings

$

277 

$

499 

$

924 

$

1,828 

Foreign currency translation adjustments, net of tax

(15)

2 

(16)

9 

Comprehensive income

$

262 

$

501 

$

908 

$

1,837 

See Notes to Condensed Consolidated Financial Statements.

 


Condensed Consolidated Statements of Cash Flows

$ in millions (unaudited)

Nine Months Ended

October 29, 2022

October 30, 2021

Operating activities

Net earnings

$

924 

$

1,828 

Adjustments to reconcile net earnings to total cash provided by (used in) operating activities:

Depreciation and amortization

679 

644 

Restructuring charges

61 

(39)

Stock-based compensation

98 

105 

Deferred income taxes

10 

(16)

Other, net

9 

3 

Changes in operating assets and liabilities, net of acquired assets and liabilities:

Receivables

(14)

43 

Merchandise inventories

(1,365)

(2,924)

Other assets

(1)

(12)

Accounts payable

224 

1,387 

Income taxes

28 

(172)

Other liabilities

(761)

214 

Total cash provided by (used in) operating activities

(108)

1,061 

Investing activities

Additions to property and equipment

(696)

(548)

Purchases of investments

(46)

(221)

Sales of investments

5 

64 

Other, net

1 

(2)

Total cash used in investing activities

(736)

(707)

Financing activities

Repurchase of common stock

(465)

(1,728)

Issuance of common stock

15 

28 

Dividends paid

(595)

(522)

Repayments of debt

(13)

(123)

Other, net

-

(2)

Total cash used in financing activities

(1,058)

(2,347)

Effect of exchange rate changes on cash and cash equivalents

(10)

6 

Decrease in cash, cash equivalents and restricted cash

(1,912)

(1,987)

Cash, cash equivalents and restricted cash at beginning of period

3,205 

5,625 

Cash, cash equivalents and restricted cash at end of period

$

1,293 

$

3,638 

See Notes to Condensed Consolidated Financial Statements.


Condensed Consolidated Statements of Changes in Shareholders' Equity

$ and shares in millions, except per share amounts (unaudited)

Common Shares

Common Stock

Additional Paid-In Capital

Retained Earnings

Accumulated Other Comprehensive Income (Loss)

Total

Balances at July 30, 2022

225.1 

$

22 

$

20 

$

2,522 

$

328 

$

2,892 

Net earnings, three months ended October 29, 2022

-

-

-

277 

-

277 

Other comprehensive loss:

Foreign currency translation adjustments, net of tax

-

-

-

-

(15)

(15)

Stock-based compensation

-

-

33 

-

-

33 

Issuance of common stock

0.1 

-

5 

-

-

5 

Common stock dividends, $0.88 per share

-

-

3 

(202)

-

(199)

Balances at October 29, 2022

225.2 

$

22 

$

61 

$

2,597 

$

313 

$

2,993 

Balances at January 29, 2022

227.4 

$

23 

$

-

$

2,668 

$

329 

$

3,020 

Net earnings, nine months ended October 29, 2022

-

-

-

924 

-

924 

Other comprehensive loss:

Foreign currency translation adjustments, net of tax

-

-

-

-

(16)

(16)

Stock-based compensation

-

-

98 

-

-

98 

Issuance of common stock

2.4 

-

15 

-

-

15 

Common stock dividends, $2.64 per share

-

-

10 

(606)

-

(596)

Repurchase of common stock

(4.6)

(1)

(62)

(389)

-

(452)

Balances at October 29, 2022

225.2 

$

22 

$

61 

$

2,597 

$

313 

$

2,993 

Balances at July 31, 2021

247.3 

$

25 

$

-

$

3,975 

$

335 

$

4,335 

Net earnings, three months ended October 30, 2021

-

-

-

499 

-

499 

Other comprehensive income:

Foreign currency translation adjustments, net of tax

-

-

-

-

2 

2 

Stock-based compensation

</