BEST BUY CO INC, 10-Q filed on 8/31/2021
Quarterly Report
v3.21.2
Document Information Statement - shares
6 Months Ended
Jul. 31, 2021
Aug. 27, 2021
Document Information [Abstract]    
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Jul. 31, 2021  
Document Fiscal Year Focus 2021  
Current Fiscal Year End Date --01-29  
Document Transition Report false  
Entity File Number 1-9595  
Entity Registrant Name BEST BUY CO., INC.  
Entity Incorporation, State or Country Code MN  
Entity Address, Address Line One 7601 Penn Avenue South  
Entity Address, City or Town Richfield  
Entity Address, State or Province MN  
Entity Tax Identification Number 41-0907483  
Entity Address, Postal Zip Code 55423  
City Area Code 612  
Local Phone Number 291-1000  
Title of 12(b) Security Common Stock, $0.10 par value per share  
Trading Symbol BBY  
Security Exchange Name NYSE  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Large Accelerated Filer  
Entity Small Business false  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   245,964,220
Document Fiscal Period Focus Q2  
Entity Central Index Key 0000764478  
Amendment Flag false  
v3.21.2
Condensed Consolidated Balance Sheets - USD ($)
$ in Millions
Jul. 31, 2021
Jan. 30, 2021
Aug. 01, 2020
Current assets      
Cash and cash equivalents $ 4,340 $ 5,494 $ 5,305
Receivables, net 883 1,061 906
Merchandise inventories 6,417 5,612 4,136
Other current assets 400 373 336
Total current assets 12,040 12,540 10,683
Property and equipment, net 2,226 2,260 2,277
Operating lease assets 2,670 2,612 2,770
Goodwill 986 986 986
Other assets 657 669 696
Total assets 18,579 19,067 17,412
Current liabilities      
Accounts payable 6,946 6,979 6,613
Accrued compensation and related expenses 605 725 253
Accrued liabilities 892 972 893
Short-term debt 110 110  
Current portion of operating lease liabilities 643 693 674
Current portion of long-term debt 14 14 681
Total current liabilities 10,357 10,521 10,080
Long-term operating lease liabilities 2,090 2,012 2,206
Long-term debt 1,243 1,253 632
Long-term liabilities 554 694 716
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 - 247.3 million, 256.9 million and 257.6 million shares, respectively 25 26 26
Additional paid-in capital     83
Retained earnings 3,975 4,233 3,413
Accumulated other comprehensive income 335 328 256
Total equity 4,335 4,587 3,778
Total liabilities and equity 18,579 19,067 17,412
Gift Card [Member]      
Current liabilities      
Short-term contract liabilities 293 317 267
Deferred Revenue [Member]      
Current liabilities      
Short-term contract liabilities $ 854 $ 711 $ 699
v3.21.2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares
Jul. 31, 2021
Jan. 30, 2021
Aug. 01, 2020
Condensed Consolidated Balance Sheets [Abstract]      
Preferred stock, par value (in dollars per share) $ 1.00 $ 1.00 $ 1.00
Preferred stock, authorized shares 400,000 400,000 400,000
Preferred stock, issued shares 0 0 0
Preferred stock, outstanding shares 0 0 0
Common stock, par value (in dollars per share) $ 0.10 $ 0.10 $ 0.10
Common stock, authorized shares 1,000,000,000.0 1,000,000,000.0 1,000,000,000.0
Common stock, issued shares 247,300,000 256,900,000  
Common stock, outstanding shares 247,300,000 256,900,000 258,800,000
v3.21.2
Condensed Consolidated Statements of Earnings - USD ($)
shares in Millions, $ in Millions
3 Months Ended 6 Months Ended
Jul. 31, 2021
Aug. 01, 2020
Jul. 31, 2021
Aug. 01, 2020
Condensed Consolidated Statements of Earnings [Abstract]        
Revenue $ 11,849 $ 9,910 $ 23,486 $ 18,472
Cost of sales 9,039 7,640 17,961 14,237
Gross profit 2,810 2,270 5,525 4,235
Selling, general and administrative expenses 2,009 1,702 3,997 3,437
Restructuring charges 4   (38) 1
Operating income 797 568 1,566 797
Other income (expense)        
Investment income and other 3 8 6 14
Interest expense (6) (15) (12) (32)
Earnings before income tax expense and equity in income of affiliates 794 561 1,560 779
Income tax expense 64 129 236 188
Equity in income of affiliates 4   5  
Net earnings $ 734 $ 432 $ 1,329 $ 591
Basic earnings per share $ 2.93 $ 1.67 $ 5.28 $ 2.28
Diluted earnings per share $ 2.90 $ 1.65 $ 5.22 $ 2.26
Weighted-average common shares outstanding        
Basic 250.2 259.5 251.7 259.0
Diluted 252.8 262.1 254.7 261.4
v3.21.2
Condensed Consolidated Statements of Comprehensive Income - USD ($)
$ in Millions
3 Months Ended 6 Months Ended
Jul. 31, 2021
Aug. 01, 2020
Jul. 31, 2021
Aug. 01, 2020
Condensed Consolidated Statements of Comprehensive Income [Abstract]        
Net earnings $ 734 $ 432 $ 1,329 $ 591
Foreign currency translation adjustments, net of tax (3) 17 7 (35)
Cash flow hedges   (4)   (4)
Comprehensive income $ 731 $ 445 $ 1,336 $ 552
v3.21.2
Condensed Consolidated Statements of Cash Flows - USD ($)
$ in Millions
6 Months Ended
Jul. 31, 2021
Aug. 01, 2020
Operating activities    
Net earnings $ 1,329 $ 591
Adjustments to reconcile net earnings to total cash provided by operating activities:    
Depreciation and amortization 430 414
Restructuring charges (38) 1
Stock-based compensation 71 65
Deferred income taxes 2 13
Other, net   9
Changes in operating assets and liabilities:    
Receivables 175 232
Merchandise inventories (794) 1,014
Other assets (19) (17)
Accounts payable (58) 1,343
Income taxes (162) 108
Other liabilities (72) 15
Total cash provided by operating activities 864 3,788
Investing activities    
Additions to property and equipment (323) (340)
Purchases of investments (93) (46)
Sales of investments 60  
Other, net (2) 3
Total cash used in investing activities (358) (383)
Financing activities    
Repurchase of common stock (1,323) (62)
Issuance of common stock 22 22
Dividends paid (350) (284)
Borrowings of debt   1,250
Repayments of debt (10) (1,257)
Other, net (1) (1)
Total cash used in financing activities (1,662) (332)
Effect of exchange rate changes on cash and cash equivalents 5 (6)
Increase (decrease) in cash, cash equivalents and restricted cash (1,151) 3,067
Cash, cash equivalents and restricted cash at beginning of period 5,625 2,355
Cash, cash equivalents and restricted cash at end of period $ 4,474 $ 5,422
v3.21.2
Condensed Consolidated Statements of Changes in Shareholders' Equity - USD ($)
shares in Millions, $ in Millions
Common Stock [Member]
Additional Paid-In Capital [Member]
Retained Earnings [Member]
Accumulated Other Comprehensive Income (Loss) [Member]
Total
Balances at Feb. 01, 2020 $ 26   $ 3,158 $ 295 $ 3,479
Balances (in shares) at Feb. 01, 2020 256.5        
Net earnings     591   591
Other comprehensive income (loss):          
Foreign currency translation adjustments, net of tax       (35) (35)
Cash flow hedges       (4) (4)
Stock-based compensation   $ 65     65
Issuance of common stock   22     22
Issuance of common stock (in shares) 2.9        
Common stock dividends   4 (288)   (284)
Repurchase of common stock   (8) (48)   (56)
Repurchase of common stock (in shares) (0.6)        
Balances at Aug. 01, 2020 $ 26 83 3,413 256 3,778
Balances (in shares) at Aug. 01, 2020 258.8        
Balances at May. 02, 2020 $ 26 15 3,126 243 3,410
Balances (in shares) at May. 02, 2020 257.6        
Net earnings     432   432
Other comprehensive income (loss):          
Foreign currency translation adjustments, net of tax       17 17
Cash flow hedges       (4) (4)
Stock-based compensation   50     50
Issuance of common stock   16     16
Issuance of common stock (in shares) 1.2        
Common stock dividends   2 (145)   (143)
Balances at Aug. 01, 2020 $ 26 83 3,413 256 3,778
Balances (in shares) at Aug. 01, 2020 258.8        
Balances at Jan. 30, 2021 $ 26   4,233 328 4,587
Balances (in shares) at Jan. 30, 2021 256.9        
Net earnings     1,329   1,329
Other comprehensive income (loss):          
Foreign currency translation adjustments, net of tax       7 7
Stock-based compensation   71     71
Issuance of common stock   22     22
Issuance of common stock (in shares) 2.5        
Common stock dividends   8 (358)   (350)
Repurchase of common stock $ (1) (101) (1,229)   (1,331)
Repurchase of common stock (in shares) (12.1)        
Balances at Jul. 31, 2021 $ 25   3,975 335 4,335
Balances (in shares) at Jul. 31, 2021 247.3        
Balances at May. 01, 2021 $ 25 33 3,762 338 4,158
Balances (in shares) at May. 01, 2021 250.4        
Net earnings     734   734
Other comprehensive income (loss):          
Foreign currency translation adjustments, net of tax       (3) (3)
Stock-based compensation   34     34
Issuance of common stock   3     3
Issuance of common stock (in shares) 0.6        
Common stock dividends   5 (180)   (175)
Repurchase of common stock   $ (75) (341)   (416)
Repurchase of common stock (in shares) (3.7)        
Balances at Jul. 31, 2021 $ 25   $ 3,975 $ 335 $ 4,335
Balances (in shares) at Jul. 31, 2021 247.3        
v3.21.2
Condensed Consolidated Statements of Changes in Shareholders' Equity (Parenthetical) - $ / shares
3 Months Ended 6 Months Ended
Jul. 31, 2021
Aug. 01, 2020
Jul. 31, 2021
Aug. 01, 2020
Condensed Consolidated Statements of Changes in Shareholders' Equity [Abstract]        
Common Stock, Dividends, Per Share, Declared $ 0.70 $ 0.55 $ 1.40 $ 1.10
v3.21.2
Basis of Presentation
6 Months Ended
Jul. 31, 2021
Basis of Presentation [Abstract]  
Basis of Presentation 1. Basis of Presentation

Unless the context otherwise requires, the use of the terms “Best Buy,” “we,” “us” and “our” in these Notes to Condensed Consolidated Financial Statements refers to Best Buy Co., Inc. and, as applicable, its consolidated subsidiaries.

In the opinion of management, the accompanying condensed consolidated financial statements contain all adjustments necessary for a fair presentation as prescribed by accounting principles generally accepted in the United States (“GAAP”). All adjustments were comprised of normal recurring adjustments, except as noted in these Notes to Condensed Consolidated Financial Statements.

During the third quarter of fiscal 2021, we made the decision to exit our operations in Mexico. All stores in Mexico were closed as of the end of the first quarter of fiscal 2022, and our International segment will be comprised of operations in Canada going forward. Refer to Note 2, Restructuring, for additional information.

In order to align our fiscal reporting periods and comply with statutory filing requirements, we consolidate the financial results of our Mexico operations on a one-month lag. Our policy is to accelerate recording the effect of events occurring in the lag period that significantly affect our condensed consolidated financial statements. No such events were identified for the reported periods.

Historically, we have generated a large proportion of our revenue and earnings in the fiscal fourth quarter, which includes the majority of the holiday shopping season in the U.S., Canada and Mexico. Due to the seasonal nature of our business, interim results are not necessarily indicative of results for the entire fiscal year. The interim financial statements and the related notes included in this Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended January 30, 2021. The first six months of fiscal 2022 and fiscal 2021 included 26 weeks.

In preparing the accompanying condensed consolidated financial statements, we evaluated the period from July 31, 2021, through the date the financial statements were issued for material subsequent events requiring recognition or disclosure. No such events were identified for the reported periods.

Total Cash, Cash Equivalents and Restricted Cash

Cash, cash equivalents and restricted cash reported on our Condensed Consolidated Balance Sheets are reconciled to the total shown on our Condensed Consolidated Statements of Cash Flows as follows ($ in millions):

July 31, 2021

January 30, 2021

August 1, 2020

Cash and cash equivalents

$

4,340 

$

5,494 

$

5,305 

Restricted cash included in Other current assets

134 

131 

117 

Total cash, cash equivalents and restricted cash

$

4,474 

$

5,625 

$

5,422 

Amounts included in restricted cash are primarily restricted to use for workers’ compensation and general liability insurance claims.
v3.21.2
Restructuring
6 Months Ended
Jul. 31, 2021
Restructuring [Abstract]  
Restructuring 2. Restructuring

Restructuring charges were as follows ($ in millions):

Three Months Ended

Six Months Ended

July 31, 2021

August 1, 2020

July 31, 2021

August 1, 2020

Mexico Exit and Strategic Realignment(1)

$

4 

$

-

$

(44)

$

-

Fiscal 2020 U.S. Retail Operating Model Changes

-

-

-

1 

Total

$

4 

$

-

$

(44)

$

1 

(1)Includes ($6) million related to inventory markdowns recorded in Cost of sales on our Condensed Consolidated Statements of Earnings for the six months ended July 31, 2021.

Mexico Exit and Strategic Realignment

In March 2020 the World Health Organization declared the outbreak of novel coronavirus disease (“COVID-19”) as a pandemic. The COVID-19 pandemic has had significant impacts on, for example, the economic conditions of the markets in which we operate, customer shopping behaviors, the role of technology in peoples’ lives and the way we meet their needs. In light of these changes, we are adapting our Building the New Blue Strategy to ensure that our focus and resources are closely aligned with the opportunities we see in front of us. As a result, in the third quarter of fiscal 2021, we made the decision to exit our operations in Mexico and began taking other actions to more broadly align our organizational structure in support of our strategy.

Charges incurred in our International segment primarily related to our decision to exit our operations in Mexico. All remaining stores in Mexico were closed in the first quarter of fiscal 2022 and we do not expect to incur material future restructuring charges related to the exit.

Charges incurred in our Domestic segment primarily related to actions taken to align our organizational structure in support of our strategy. During the six months ended July 31, 2021, we recorded a $44 million credit primarily due to a reduction in expected termination benefits resulting from adjustments to previously planned organizational changes and higher-than-expected employee retention.

As we continue to evolve our Building the New Blue Strategy, it is possible that we will incur material future restructuring costs, but we are unable to forecast the timing and magnitude of such costs.

All charges incurred related to the exit from Mexico and strategic realignment described above were from continuing operations and were presented as follows ($ in millions):

Statement of

Three Months Ended July 31, 2021

Six Months Ended July 31, 2021

Earnings Location

Domestic

International

Total

Domestic

International

Total

Inventory markdowns

Cost of sales

$

-

$

-

$

-

$

-

$

(6)

$

(6)

Asset impairments

Restructuring charges

-

4 

4 

-

7 

7 

Termination benefits

Restructuring charges

-

-

-

(44)

(1)

(45)

$

-

$

4 

$

4 

$

(44)

$

-

$

(44)

Statement of

Cumulative Amount as of July 31, 2021

Earnings Location

Domestic

International

Total

Inventory markdowns

Cost of sales

$

-

$

17 

$

17 

Asset impairments(1)

Restructuring charges

10 

64 

74 

Termination benefits

Restructuring charges

79 

19 

98 

Currency translation adjustment

Restructuring charges

-

39 

39 

Other(2)

Restructuring charges

-

5 

5 

$

89 

$

144 

$

233 

(1)Remaining net carrying value approximates fair value and was immaterial as of July 31, 2021.

(2)Other charges are primarily comprised of contract termination costs.

Restructuring accrual activity related to the exit from Mexico and strategic realignment described above was as follows ($ in millions):

Termination Benefits

Domestic

International

Total

Balances at January 30, 2021

$

104 

$

20 

$

124 

Cash payments

(48)

(15)

(63)

Adjustments(1)

(44)

(1)

(45)

Changes in foreign currency exchange rates

-

(1)

(1)

Balances at July 31, 2021

$

12 

$

3 

$

15 

(1)Represents adjustments to previously planned organizational changes in our Domestic segment and higher-than-expected employee retention in both our Domestic and International segments.

Fiscal 2020 U.S. Retail Operating Model Changes

In the second quarter of fiscal 2020, we made changes primarily related to our U.S. retail operating model to increase organization effectiveness and create a more seamless customer experience across all channels. All charges incurred were related to termination benefits within our Domestic segment and were presented within Restructuring charges from continuing operations on our Condensed Consolidated Statements of Earnings. As of July 31, 2021, the cumulative amount of charges incurred was $41 million and no material liability remains.
v3.21.2
Goodwill and Intangible Assets
6 Months Ended
Jul. 31, 2021
Goodwill and Intangible Assets [Abstract]  
Goodwill and Intangible Assets 3. Goodwill and Intangible Assets

Goodwill

Balances related to goodwill remained unchanged as of July 31, 2021, January 30, 2021, and August 1, 2020, as follows ($ in millions):

Gross Carrying Amount

Cumulative Impairment

Domestic

$

1,053 

$

(67)

International

608 

(608)

Total

$

1,661 

$

(675)


No impairment charges were recorded during the fiscal periods presented.

Definite-Lived Intangible Assets

We have definite-lived intangible assets recorded within Other assets on our Condensed Consolidated Balance Sheets as follows ($ in millions):

July 31, 2021

January 30, 2021

August 1, 2020

Weighted-Average

Gross Carrying
Amount

Accumulated
Amortization

Gross Carrying
Amount

Accumulated
Amortization

Gross Carrying
Amount

Accumulated
Amortization

Useful Life Remaining as of July 31, 2021

(in years)

Customer relationships

$

339 

$

152 

$

339 

$

124 

$

339 

$

97 

6.5

Tradenames

81 

31 

81 

24 

81 

17 

4.5

Developed technology

56 

32 

56 

27 

56 

21 

2.1

Total

$

476 

$

215 

$

476 

$

175 

$

476 

$

135 

5.7

Amortization expense was as follows ($ in millions):

Statement of

Three Months Ended

Six Months Ended

Earnings Location

July 31, 2021

August 1, 2020

July 31, 2021

August 1, 2020

Amortization expense

SG&A

$

20 

$

20 

$

40 

$

40 

Amortization expense expected to be recognized in future periods is as follows ($ in millions):

Amortization Expense

Remainder of fiscal 2022

$

40 

Fiscal 2023

79 

Fiscal 2024

54 

Fiscal 2025