UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) February 27, 2020

BEST BUY CO., INC.
(Exact name of registrant as specified in its charter)

					
Minnesota		1-9595		41-0907483	
(State or other jurisdiction
of incorporation)		(Commission
File Number)		(IRS Employer
Identification No.)	

			
7601 Penn Avenue South			
Richfield, Minnesota		55423	
(Address of principal executive offices)		(Zip Code)	

Registrant’s telephone number, including area code (612) 291-1000
N/A
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)	
	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)	
	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))	
	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))	
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 is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company 
If an emerging growth company, indicate by check mark if 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. 

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Item 2.02
Results of Operations and Financial Condition.

On February 27, 2020, Best Buy Co., Inc. (“Best Buy” or the “registrant”) issued a news release announcing its results of operations for the fourth quarter and year ended February 1, 2020.

The registrant is scheduled to conduct an earnings conference call at 8:00 a.m. Eastern Time (7:00 a.m. Central Time) on February 27, 2020. The earnings conference call is expected to be available live on the registrant’s website at www.investors.bestbuy.com.

The news release issued on February 27, 2020, is furnished as Exhibit 99 to this Current Report on Form 8-K and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability of that Section unless the registrant specifically incorporates it by reference in a document filed under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.

Item 9.01
Financial Statements and Exhibits.

(d) Exhibits.

The following are furnished as Exhibits to this Current Report on Form 8-K.

Exhibit No.		Description of Exhibit	
99		News release issued February 27, 2020 (furnished pursuant to Item 2.02). Any internet address provided in this release is for information purposes only and is not intended to be a hyperlink. Accordingly, no information at any internet address is included herein.	
104		Cover Page Interactive Data File (embedded within the Inline XBRL document).	

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

			
		BEST BUY CO., INC.	
		(Registrant)	
			
Date: February 27, 2020	By:	/s/ MATHEW R. WATSON	
		Mathew R. Watson	
		Senior Vice President, Finance – Controller and Chief Accounting Officer	

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Best Buy Reports Better-Than-Expected Fourth Quarter Results
Enterprise Comparable Sales Increased 3.2%
GAAP Diluted EPS Increased 6% to $2.84
Non-GAAP Diluted EPS Increased 7% to $2.90
Announces FY21 Non-GAAP Diluted EPS Guidance of $6.10 to $6.30
Increases Quarterly Dividend 10% to $0.55 per Share
﻿
MINNEAPOLIS, February 27, 2020 -- Best Buy Co., Inc. (NYSE: BBY) today announced results for the 13-week fourth quarter ended February 1, 2020 (“Q4 FY20”), as compared to the 13-week fourth quarter ended February 2, 2019 (“Q4 FY19”).

﻿	 	 	 	 	 	 	 	 	 	 	 	 	
﻿	Q4 FY20	Q4 FY19	FY20	FY19	
Revenue ($ in millions)	 	 	 	 	 	 	 	 	 	 	 	 	
Enterprise	$	15,196 	 	$	14,801 	 	$	43,638 	 	$	42,879 	 	
Domestic segment	$	13,848 	 	$	13,497 	 	$	40,114 	 	$	39,304 	 	
International segment	$	1,348 	 	$	1,304 	 	$	3,524 	 	$	3,575 	 	
Enterprise comparable sales % change1	 	3.2 	%	 	3.0 	%	 	2.1 	%	 	4.8 	%	
Domestic comparable sales % change1	 	3.4 	%	 	3.0 	%	 	2.3 	%	 	4.8 	%	
Domestic comparable online sales % change1	 	18.7 	%	 	9.3 	%	 	17.0 	%	 	10.5 	%	
International comparable sales % change1	 	1.6 	%	 	2.5 	%	 	(0.5)	%	 	4.6 	%	
Operating Income	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP operating income as a % of revenue	 	6.4 	%	 	6.6 	%	 	4.6 	%	 	4.4 	%	
Non-GAAP operating income as a % of revenue	 	6.5 	%	 	6.7 	%	 	4.9 	%	 	4.6 	%	
Diluted Earnings per Share ("EPS")	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP diluted EPS	$	2.84 	 	$	2.69 	 	$	5.75 	 	$	5.20 	 	
Non-GAAP diluted EPS	$	2.90 	 	$	2.72 	 	$	6.07 	 	$	5.32 	 	
﻿
For GAAP to non-GAAP reconciliations of the measures referred to in the above table, please refer to the attached supporting schedule Reconciliation of Non-GAAP Financial Measures.
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“We are posting our 12th straight quarter of comparable sales growth and showing our strength as a successful multi-channel retailer who can meet customers when and where they want,” said Corie Barry, Best Buy CEO. “We offered compelling holiday deals that resonated with customers and provided a seamless shopping experience, great inventory availability and fast and free delivery. Across online, home and stores, we are fulfilling our purpose to help enrich people’s lives through technology while also helping technology companies commercialize their product innovations.”
﻿
Best Buy CFO Matt Bilunas commented, “As we enter FY21, we are closely monitoring the developments related to the coronavirus outbreak. This is a very fluid situation, which makes it difficult to determine exact financial impacts from disruptions in supply chain. Based on what we know today, we have assumed the majority of the impacts occur in the first half of the year. Therefore, we view this as a relatively short-term disruption that does not impact our long-term strategy and initiatives. Our guidance ranges for both Q1 and the full year reflect our best estimates of the impacts at this time.”

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Bilunas continued, “For FY21, we expect to deliver full-year comparable sales growth in the range of flat to 2% while continuing to invest in those areas necessary to make strategic progress and deliver enhanced employee and customer experiences, as well as continuing to drive cost savings and efficiencies. We expect our gross profit rate to be approximately flat and our SG&A rate to be up slightly compared to FY20, resulting in a full-year non-GAAP operating income rate of approximately 4.8%. We are confident that our FY21 plan moves us along the path to achieve our FY25 targets, specifically the financial targets of $50 billion in revenue and a 5% non-GAAP operating income rate.”
﻿
FY21 Financial Guidance
﻿
Best Buy is providing the following full-year FY21 financial outlook:
	·		Enterprise revenue of $43.3 billion to $44.3 billion	
	·		Enterprise comparable sales growth of flat to 2.0%	
	·		Enterprise non-GAAP operating income rate of approximately 4.8%2	
	·		Non-GAAP effective income tax rate of approximately 23.0%2	
	·		Non-GAAP diluted EPS of $6.10 to $6.302	
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Best Buy is providing the following Q1 FY21 financial outlook:
	·		Enterprise revenue of $9.1 billion to $9.2 billion	
	·		Enterprise comparable sales growth of flat to 1.0%	
	·		Non-GAAP effective income tax rate of approximately 22.5%2	
	·		Diluted weighted average share count of approximately 260 million	
	·		Non-GAAP diluted EPS of $1.00 to $1.052	
﻿
Domestic Segment Q4 FY20 Results
﻿
Domestic Revenue
Domestic revenue of $13.85 billion increased 2.6% versus last year. The increase was driven by comparable sales growth of 3.4%, partially offset by the loss of revenue from store closures in the past year.
﻿
The largest comparable sales growth drivers were headphones, computing, appliances, mobile phones and tablets. These drivers were partially offset by declines in the gaming category.
﻿
Domestic online revenue of $3.52 billion increased 18.7% on a comparable basis due to higher average order values, increased traffic and higher conversion rates. As a percentage of total Domestic revenue, online revenue increased approximately 350 basis points to 25.4% versus 21.9% last year.
﻿
Domestic Gross Profit Rate
Domestic gross profit rate was 21.2% versus 22.1% last year. The gross profit rate decrease of approximately 90 basis points was primarily driven by mix into lower-margin products, a lower gross profit rate in the services category and the impacts associated with tariffs on goods imported from China.
﻿
Domestic Selling, General and Administrative Expenses (“SG&A”)
Domestic GAAP SG&A was $2.05 billion, or 14.8% of revenue, versus $2.10 billion, or 15.6% of revenue, last year. On a non-GAAP basis, SG&A was $2.03 billion, or 14.7% of revenue, versus $2.08 billion, or 15.4% of revenue, last year. Both GAAP and non-GAAP SG&A decreased primarily due to lower incentive compensation expense, which was partially offset primarily by higher variable costs due to increased revenue and higher advertising expense. 
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International Segment Q4 FY20 Results
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International Revenue
International revenue of $1.35 billion increased 3.4% versus last year. This increase was primarily driven by the impact of approximately 160 basis points of favorable foreign currency exchange rates and comparable sales growth of 1.6%, which was driven by Canada.  
﻿
International Gross Profit Rate
International gross profit rate was 22.6% versus 22.9% last year. The gross profit rate decrease of approximately 30 basis points was primarily due to Canada, which was largely driven by a by mix into lower-margin products.
﻿
International SG&A
International SG&A was $215 million, or 15.9% of revenue, versus $207 million, or 15.9% of revenue, last year. SG&A increased primarily due to the negative impact of foreign exchange rates and expense associated with new stores in Mexico opened in the past year.
﻿
Dividends and Share Repurchases
﻿
In Q4 FY20, the company returned a total of $436 million to shareholders through share repurchases of $307 million and dividends of $129 million. For the full year, the company returned a total of $1.53 billion to shareholders through share repurchases of $1.0 billion and dividends of $527 million. 
﻿
Today, the company announced its board of directors approved a 10% increase in the regular quarterly dividend to $0.55 per share, effective immediately. The regular quarterly dividend will be payable on April 9, 2020, to shareholders of record as of the close of business on March 19, 2020.
﻿
The company plans to spend between $750 million and $1.0 billion on share repurchases in FY21.
﻿
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  27, 2020. A webcast of the call is expected to be available at www.investors.bestbuy.com,  both live and after the call.
﻿
Notes:
(1) In Q1 FY20, the company refined its methodology for calculating comparable sales. It now reflects certain revenue streams previously excluded from the comparable sales calculation, such as credit card revenue, gift card breakage, commercial sales and sales of merchandise to wholesalers and dealers, as applicable. The impact of adopting these changes is immaterial to all periods presented, and therefore prior-period comparable sales disclosures have not been restated.
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(2) A reconciliation of the projected non-GAAP operating income, non-GAAP effective income tax rate and non-GAAP diluted EPS, which are forward-looking non-GAAP financial measures, to the most directly comparable GAAP financial measures, is not provided because the company is unable to provide such reconciliation without unreasonable effort. The inability to provide a reconciliation is due to the uncertainty and inherent difficulty predicting the occurrence, the financial impact and the periods in which the non-GAAP adjustments may be recognized. These GAAP measures may include the impact of such items as restructuring charges; 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

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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.
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Forward-Looking and Cautionary Statements:
This earnings release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 as contained in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that reflect management’s current views and estimates regarding future market conditions, company performance and financial results, 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: 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 Securities and Exchange Commission (“SEC”), including, but not limited to, Best Buy’s Annual Report on Form 10-K filed with the SEC on March 28, 2019. Best Buy cautions that the foregoing list of important factors is not complete, and any forward-looking statements speak only as of the date they are made, and Best Buy assumes no obligation to update any forward-looking statement that it may make.
﻿
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Investor Contact:	Media Contact:	
Mollie O'Brien	Jeff Shelman	
(612) 291-7735 or mollie.obrien@bestbuy.com	(612) 291-6114 or jeffrey.shelman@bestbuy.com	
﻿

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BEST BUY CO., INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
($ and shares in millions, except per share amounts)
(Unaudited and subject to reclassification)
﻿
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﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
﻿	Three Months Ended	 	Twelve Months Ended	
﻿	February 1, 2020	 	February 2, 2019	 	February 1, 2020	 	February 2, 2019	
Revenue	$	15,196 	 	 	$	14,801 	 	 	$	43,638 	 	 	$	42,879 	 	
Cost of sales	 	11,961 	 	 	 	11,518 	 	 	 	33,590 	 	 	 	32,918 	 	
Gross profit	 	3,235 	 	 	 	3,283 	 	 	 	10,048 	 	 	 	9,961 	 	
Gross profit %	 	21.3 	%	 	 	22.2 	%	 	 	23.0 	%	 	 	23.2 	%	
Selling, general and administrative expenses	2,268 	 	 	 	2,306 	 	 	 	7,998 	 	 	 	8,015 	 	
SG&A %	 	14.9 	%	 	 	15.6 	%	 	 	18.3 	%	 	 	18.7 	%	
Restructuring charges	 	 -	 	 	 	(1)	 	 	 	41 	 	 	 	46 	 	
Operating income	 	967 	 	 	 	978 	 	 	 	2,009 	 	 	 	1,900 	 	
Operating income %	 	6.4 	%	 	 	6.6 	%	 	 	4.6 	%	 	 	4.4 	%	
Other income (expense)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gain on sale of investments	 	 -	 	 	 	 -	 	 	 	1 	 	 	 	12 	 	
Investment income and other	 	14 	 	 	 	14 	 	 	 	47 	 	 	 	49 	 	
Interest expense	 	(14)	 	 	 	(20)	 	 	 	(64)	 	 	 	(73)	 	
Earnings before income tax expense	 	967 	 	 	 	972 	 	 	 	1,993 	 	 	 	1,888 	 	
Income tax expense	 	222 	 	 	 	237 	 	 	 	452 	 	 	 	424 	 	
Effective tax rate	 	22.9 	%	 	 	24.3 	%	 	 	22.7 	%	 	 	22.4 	%	
Net earnings	$	745 	 	 	$	735 	 	 	$	1,541 	 	 	$	1,464 	 	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic earnings per share	$	2.87 	 	 	$	2.73 	 	 	$	5.82 	 	 	$	5.30 	 	
Diluted earnings per share	$	2.84 	 	 	$	2.69 	 	 	$	5.75 	 	 	$	5.20 	 	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Weighted-average common shares outstanding	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic	 	259.7 	 	 	 	269.0 	 	 	 	264.9 	 	 	 	276.4 	 	
Diluted	 	262.4 	 	 	 	273.4 	 	 	 	268.1 	 	 	 	281.4 	 	
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BEST BUY CO., INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
($ in millions)
(Unaudited and subject to reclassification)
﻿
﻿
﻿	 	 	 	 	 	 	 	
﻿	 	 	 	 	 	 	 	
﻿	February 1, 2020	 	February 2, 2019	
Assets	 	 	 	 	 	 	 	
Current assets	 	 	 	 	 	 	 	
Cash and cash equivalents	$	2,229 	 	 	$	1,980 	 	
Receivables, net	 	1,149 	 	 	 	1,015 	 	
Merchandise inventories	 	5,174 	 	 	 	5,409 	 	
Other current assets	 	305 	 	 	 	466 	 	
Total current assets	 	8,857 	 	 	 	8,870 	 	
Property and equipment, net	 	2,328 	 	 	 	2,510 	 	
Operating lease assets	 	2,709 	 	 	 	 -	 	
Goodwill	 	984 	 	 	 	915 	 	
Other assets	 	713 	 	 	 	606 	 	
Total assets	$	15,591 	 	 	$	12,901 	 	
﻿	 	 	 	 	 	 	 	
Liabilities and equity	 	 	 	 	 	 	 	
Current liabilities	 	 	 	 	 	 	 	
Accounts payable	$	5,288 	 	 	$	5,257 	 	
Unredeemed gift card liabilities	 	281 	 	 	 	290 	 	
Deferred revenue	 	501 	 	 	 	446 	 	
Accrued compensation and related expenses	 	410 	 	 	 	482 	 	
Accrued liabilities	 	906 	 	 	 	982 	 	
Current portion of operating lease liabilities	 	660 	 	 	 	 -	 	
Current portion of long-term debt	 	14 	 	 	 	56 	 	
Total current liabilities	 	8,060 	 	 	 	7,513 	 	
Long-term operating lease liabilities	 	2,138 	 	 	 	 -	 	
Long-term liabilities	 	657 	 	 	 	750 	 	
Long-term debt	 	1,257 	 	 	 	1,332 	 	
Equity	 	3,479 	 	 	 	3,306 	 	
Total liabilities and equity	$	15,591 	 	 	$	12,901 	 	
﻿
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BEST BUY CO., INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in millions)
(Unaudited and subject to reclassification)
﻿
﻿	 	 	 	 	 	 	 	
﻿	 	 	 	 	 	 	 	
﻿	Twelve Months Ended	
﻿	February 1, 2020	 	February 2, 2019	
Operating activities	 	 	 	 	 	 	 	
Net earnings	$	1,541 	 	 	$	1,464 	 	
Adjustments to reconcile net earnings to total cash provided by operating activities	 	 	 	 	 	
Depreciation and amortization	 	812 	 	 	 	770 	 	
Restructuring charges	 	41 	 	 	 	46 	 	
Stock-based compensation	 	143 	 	 	 	123 	 	
Deferred income taxes	 	70 	 	 	 	10 	 	
Other, net	 	21 	 	 	 	(25)	 	
Changes in operating assets and liabilities, net of acquired assets and liabilities	 	 	 	 	 	
Receivables	 	(131)	 	 	 	28 	 	
Merchandise inventories	 	237 	 	 	 	(194)	 	
Other assets	 	16 	 	 	 	(34)	 	
Accounts payable	 	47 	 	 	 	432 	 	
Income taxes	 	(132)	 	 	 	22 	 	
Other liabilities	 	(100)	 	 	 	(234)	 	
Total cash provided by operating activities	 	2,565 	 	 	 	2,408 	 	
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Investing activities	 	 	 	 	 	 	 	
Additions to property and equipment	 	(743)	 	 	 	(819)	 	
Purchases of investments	 	(330)	 	 	 	 -	 	
Sales of investments	 	322 	 	 	 	2,098 	 	
Acquisitions, net of cash acquired	 	(145)	 	 	 	(787)	 	
Other, net	 	1 	 	 	 	16 	 	
Total cash provided by (used in) investing activities	 	(895)	 	 	 	508 	 	
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Financing activities	 	 	 	 	 	 	 	
Repurchase of common stock	 	(1,003)	 	 	 	(1,505)	 	
Issuance of common stock	 	48 	 	 	 	38 	 	
Dividends paid	 	(527)	 	 	 	(497)	 	
Borrowings of debt	 	 -	 	 	 	498 	 	
Repayments of debt	 	(15)	 	 	 	(546)	 	
Other, net	 	(1)	 	 	 	(6)	 	
Total cash used in financing activities	 	(1,498)	 	 	 	(2,018)	 	
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Effect of exchange rate changes on cash	 	(1)	 	 	 	(14)	 	
Increase in cash, cash equivalents and restricted cash	 	171 	 	 	 	884 	 	
Cash, cash equivalents and restricted cash at beginning of period	 	2,184 	 	 	 	1,300 	 	
Cash, cash equivalents and restricted cash at end of period	$	2,355 	 	 	$	2,184 	 	
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BEST BUY CO., INC.
SEGMENT INFORMATION
($ in millions)
(Unaudited and subject to reclassification)
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﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
﻿	Three Months Ended	 	Twelve Months Ended	
Domestic Segment Results	February 1, 2020	 	February 2, 2019	 	February 1, 2020	 	February 2, 2019	
Revenue	$	13,848 	 	 	$	13,497 	 	 	$	40,114 	 	 	$	39,304 	 	
Comparable sales % change	 	3.4 	%	 	 	3.0 	%	 	 	2.3 	%	 	 	4.8 	%	
Comparable online sales % change	 	18.7 	%	 	 	9.3 	%	 	 	17.0 	%	 	 	10.5 	%	
Gross profit	$	2,931 	 	 	$	2,985 	 	 	$	9,234 	 	 	$	9,144 	 	
Gross profit as a % of revenue	 	21.2 	%	 	 	22.1 	%	 	 	23.0 	%	 	 	23.3 	%	
SG&A	$	2,053 	 	 	$	2,099 	 	 	$	7,286 	 	 	$	7,300 	 	
SG&A as a % of revenue	 	14.8 	%	 	 	15.6 	%	 	 	18.2 	%	 	 	18.6 	%	
Operating income	$	878 	 	 	$	886 	 	 	$	1,907 	 	 	$	1,797 	 	
Operating income as a % of revenue	 	6.3 	%	 	 	6.6 	%	 	 	4.8 	%	 	 	4.6 	%	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Domestic Segment Non-GAAP Results1	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross profit	$	2,931 	 	 	$	2,985 	 	 	$	9,234 	 	 	$	9,144 	 	
Gross profit as a % of revenue	 	21.2 	%	 	 	22.1 	%	 	 	23.0 	%	 	 	23.3 	%	
SG&A	$	2,034 	 	 	$	2,082 	 	 	$	7,211 	 	 	$	7,259 	 	
SG&A as a % of revenue	 	14.7 	%	 	 	15.4 	%	 	 	18.0 	%	 	 	18.5 	%	
Operating income	$	897 	 	 	$	903 	 	 	$	2,023 	 	 	$	1,885 	 	
Operating income as a % of revenue	 	6.5 	%	 	 	6.7 	%	 	 	5.0 	%	 	 	4.8 	%	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
﻿	Three Months Ended	 	Twelve Months Ended	
International Segment Results	February 1, 2020	 	February 2, 2019	 	February 1, 2020	 	February 2, 2019	
Revenue	$	1,348 	 	 	$	1,304 	 	 	$	3,524 	 	 	$	3,575 	 	
Comparable sales % change	 	1.6 	%	 	 	2.5 	%	 	 	(0.5)	%	 	 	4.6 	%	
Gross profit	$	304 	 	 	$	298 	 	 	$	814 	 	 	$	817 	 	
Gross profit as a % of revenue	 	22.6 	%	 	 	22.9 	%	 	 	23.1 	%	 	 	22.9 	%	
SG&A	$	215 	 	 	$	207 	 	 	$	712 	 	 	$	715 	 	
SG&A as a % of revenue	 	15.9 	%	 	 	15.9 	%	 	 	20.2 	%	 	 	20.0 	%	
Operating income	$	89 	 	 	$	92 	 	 	$	102 	 	 	$	103 	 	
Operating income as a % of revenue	 	6.6 	%	 	 	7.1 	%	 	 	2.9 	%	 	 	2.9 	%	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
International Segment Non-GAAP Results1	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross profit	$	304 	 	 	$	298 	 	 	$	814 	 	 	$	817 	 	
Gross profit as a % of revenue	 	22.6 	%	 	 	22.9 	%	 	 	23.1 	%	 	 	22.9 	%	
SG&A	$	215 	 	 	$	207 	 	 	$	712 	 	 	$	714 	 	
SG&A as a % of revenue	 	15.9 	%	 	 	15.9 	%	 	 	20.2 	%	 	 	20.0 	%	
Operating income	$	89 	 	 	$	91 	 	 	$	102 	 	 	$	103 	 	
Operating income as a % of revenue	 	6.6 	%	 	 	7.0 	%	 	 	2.9 	%	 	 	2.9 	%	
﻿
﻿
(1)For GAAP to non-GAAP reconciliations, please refer to the attached supporting schedule titled Reconciliation of Non-GAAP Financial Measures.

8

 

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 1, 2020	 	February 2, 2019	 	February 1, 2020	 	February 2, 2019	
Computing and Mobile Phones	42 	%	 	41 	%	 	6.8 	%	 	1.2 	%	
Consumer Electronics	36 	%	 	36 	%	 	4.1 	%	 	2.9 	%	
Appliances	10 	%	 	9 	%	 	14.4 	%	 	8.5 	%	
Entertainment	8 	%	 	10 	%	 	(21.8)	%	 	2.7 	%	
Services	4 	%	 	4 	%	 	(0.1)	%	 	13.7 	%	
Other	 -	%	 	 -	%	 	N/A	 	 	N/A	 	
Total	100 	%	 	100 	%	 	3.4 	%	 	3.0 	%	
﻿	 	 	 	 	 	 	 	 	 	 	 	
﻿	Revenue Mix	 	Comparable Sales	
﻿	Three Months Ended	 	Three Months Ended	
International Segment	February 1, 2020	 	February 2, 2019	 	February 1, 2020	 	February 2, 2019	
Computing and Mobile Phones	42 	%	 	41 	%	 	7.3 	%	 	1.2 	%	
Consumer Electronics	37 	%	 	35 	%	 	1.2 	%	 	1.2 	%	
Appliances	8 	%	 	8 	%	 	(3.5)	%	 	8.6 	%	
Entertainment	7 	%	 	9 	%	 	(16.9)	%	 	(2.5)	%	
Services	5 	%	 	5 	%	 	8.5 	%	 	20.0 	%	
Other	1 	%	 	2 	%	 	(16.1)	%	 	29.6 	%	
Total	100 	%	 	100 	%	 	1.6 	%	 	2.5 	%	
﻿

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, 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	
﻿	February 1, 2020	 	February 2, 2019	
﻿	Domestic	 	International	 	Consolidated	 	Domestic	 	International	 	Consolidated	
SG&A	$	2,053 	 	 	$	215 	 	 	$	2,268 	 	 	$	2,099 	 	 	$	207 	 	 	$	2,306 	 	
% of revenue	 	14.8 	%	 	 	15.9 	%	 	 	14.9 	%	 	 	15.6 	%	 	 	15.9 	%	 	 	15.6 	%	
Intangible asset amortization1	 	(19)	 	 	 	 -	 	 	 	(19)	 	 	 	(17)	 	 	 	 -	 	 	 	(17)	 	
Non-GAAP SG&A	$	2,034 	 	 	$	215 	 	 	$	2,249 	 	 	$	2,082 	 	 	$	207 	 	 	$	2,289 	 	
% of revenue	 	14.7 	%	 	 	15.9 	%	 	 	14.8 	%	 	 	15.4 	%	 	 	15.9 	%	 	 	15.5 	%	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating income	$	878 	 	 	$	89 	 	 	$	967 	 	 	$	886 	 	 	$	92 	 	 	$	978 	 	
% of revenue	 	6.3 	%	 	 	6.6 	%	 	 	6.4 	%	 	 	6.6 	%	 	 	7.1 	%	 	 	6.6 	%	
Intangible asset amortization1	 	19 	 	 	 	 -	 	 	 	19 	 	 	 	17 	 	 	 	 -	 	 	 	17 	 	
Restructuring charges2	 	 -	 	 	 	 -	 	 	 	 -	 	 	 	 -	 	 	 	(1)	 	 	 	(1)	 	
Non-GAAP operating income	$	897 	 	 	$	89 	 	 	$	986 	 	 	$	903 	 	 	$	91 	 	 	$	994 	 	
% of revenue	 	6.5 	%	 	 	6.6 	%	 	 	6.5 	%	 	 	6.7 	%	 	 	7.0 	%	 	 	6.7 	%	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Effective tax rate	 	 	 	 	 	 	 	 	 	22.9 	%	 	 	 	 	 	 	 	 	 	 	24.3 	%	
Tax reform - repatriation tax3	 	 	 	 	 	 	 	 	 	 -	%	 	 	 	 	 	 	 	 	 	 	0.2 	%	
Tax reform - deferred tax rate change3	 	 	 	 	 	 	 	 	 	 -	%	 	 	 	 	 	 	 	 	 	 	0.1 	%	
Non-GAAP effective tax rate	 	 	 	 	 	 	 	 	 	22.9 	%	 	 	 	 	 	 	 	 	 	 	24.6 	%	
﻿
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
﻿	Three Months Ended	 	Three Months Ended	
﻿	February 1, 2020	 	February 2, 2019	
﻿	Pretax Earnings	 	Net of Tax4	 	Per Share	 	Pretax Earnings	 	Net of Tax4	 	Per Share	
GAAP diluted EPS	 	 	 	 	 	 	 	 	$	2.84 	 	 	 	 	 	 	 	 	 	 	$	2.69 	 	
Intangible asset amortization1	$	19 	 	 	$	14 	 	 	 	0.06 	 	 	$	17 	 	 	$	13 	 	 	 	0.05 	 	
Restructuring charges2	 	 -	 	 	 	 -	 	 	 	 -	 	 	 	(1)	 	 	 	(1)	 	 	 	(0.01)	 	
Acquisition-related transaction costs1	 	 -	 	 	 	 -	 	 	 	 -	 	 	 	 -	 	 	 	1 	 	 	 	 -	 	
Tax reform - repatriation tax3	 	 -	 	 	 	 -	 	 	 	 -	 	 	 	 -	 	 	 	(2)	 	 	 	(0.01)	 	
Non-GAAP diluted EPS	 	 	 	 	 	 	 	 	$	2.90 	 	 	 	 	 	 	 	 	 	 	$	2.72 	 	
﻿

10

 

﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
﻿	Twelve Months Ended	 	Twelve Months Ended	
﻿	February 1, 2020	 	February 2, 2019	
﻿	Domestic	 	International	 	Consolidated	 	Domestic	 	International	 	Consolidated	
SG&A	$	7,286 	 	 	$	712 	 	 	$	7,998 	 	 	$	7,300 	 	 	$	715 	 	 	$	8,015 	 	
% of revenue	 	18.2 	%	 	 	20.2 	%	 	 	18.3 	%	 	 	18.6 	%	 	 	20.0 	%	 	 	18.7 	%	
Intangible asset amortization1	 	(72)	 	 	 	 -	 	 	 	(72)	 	 	 	(22)	 	 	 	 -	 	 	 	(22)	 	
Acquisition-related transaction costs1	 	(3)	 	 	 	 -	 	 	 	(3)	 	 	 	(13)	 	 	 	 -	 	 	 	(13)	 	
Tax reform-related item - employee bonus3	 	 -	 	 	 	 -	 	 	 	 -	 	 	 	(6)	 	 	 	(1)	 	 	 	(7)	 	
Non-GAAP SG&A	$	7,211 	 	 	$	712 	 	 	$	7,923 	 	 	$	7,259 	 	 	$	714 	 	 	$	7,973 	 	
% of revenue	 	18.0 	%	 	 	20.2 	%	 	 	18.2 	%	 	 	18.5 	%	 	 	20.0 	%	 	 	18.6 	%	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating income	$	1,907 	 	 	$	102 	 	 	$	2,009 	 	 	$	1,797 	 	 	$	103 	 	 	$	1,900 	 	
% of revenue	 	4.8 	%	 	 	2.9 	%	 	 	4.6 	%	 	 	4.6 	%	 	 	2.9 	%	 	 	4.4 	%	
Intangible asset amortization1	 	72 	 	 	 	 -	 	 	 	72 	 	 	 	22 	 	 	 	 -	 	 	 	22 	 	
Restructuring charges2	 	41 	 	 	 	 -	 	 	 	41 	 	 	 	47 	 	 	 	(1)	 	 	 	46 	 	
Acquisition-related transaction costs1	 	3 	 	 	 	 -	 	 	 	3 	 	 	 	13 	 	 	 	 -	 	 	 	13 	 	
Tax reform-related item - employee bonus3	 	 -	 	 	 	 -	 	 	 	 -	 	 	 	6 	 	 	 	1 	 	 	 	7 	 	
Non-GAAP operating income	$	2,023 	 	 	$	102 	 	 	$	2,125 	 	 	$	1,885 	 	 	$	103 	 	 	$	1,988 	 	
% of revenue	 	5.0 	%	 	 	2.9 	%	 	 	4.9 	%	 	 	4.8 	%	 	 	2.9 	%	 	 	4.6 	%	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Effective tax rate	 	 	 	 	 	 	 	 	 	22.7 	%	 	 	 	 	 	 	 	 	 	 	22.4 	%	
Intangible asset amortization1	 	 	 	 	 	 	 	 	 	0.1 	%	 	 	 	 	 	 	 	 	 	 	 -	%	
Restructuring charges2	 	 	 	 	 	 	 	 	 	 -	%	 	 	 	 	 	 	 	 	 	 	(0.1)	%	
Tax reform - repatriation tax3	 	 	 	 	 	 	 	 	 	 -	%	 	 	 	 	 	 	 	 	 	 	1.1 	%	
Tax reform - deferred tax rate change3	 	 	 	 	 	 	 	 	 	 -	%	 	 	 	 	 	 	 	 	 	 	0.3 	%	
Non-GAAP effective tax rate	 	 	 	 	 	 	 	 	 	22.8 	%	 	 	 	 	 	 	 	 	 	 	23.7 	%	
﻿
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
﻿	Twelve Months Ended	 	Twelve Months Ended	
﻿	February 1, 2020	 	February 2, 2019	
﻿	Pretax Earnings	 	Net of Tax4	 	Per Share	 	Pretax Earnings	 	Net of Tax4	 	Per Share	
GAAP diluted EPS	 	 	 	 	 	 	 	 	$	5.75 	 	 	 	 	 	 	 	 	 	 	$	5.20 	 	
Intangible asset amortization1	$	72 	 	 	$	54 	 	 	 	0.20 	 	 	$	22 	 	 	$	17 	 	 	 	0.06 	 	
Restructuring charges2	 	41 	 	 	 	32 	 	 	 	0.11 	 	 	 	46 	 	 	 	35 	 	 	 	0.12 	 	
Acquisition-related transaction costs1	 	3 	 	 	 	2 	 	 	 	0.01 	 	 	 	13 	 	 	 	11 	 	 	 	0.04 	 	
Gain on investments, net	 	(1)	 	 	 	(1)	 	 	 	 -	 	 	 	(12)	 	 	 	(9)	 	 	 	(0.03)	 	
Tax reform - repatriation tax3	 	 -	 	 	 	 -	 	 	 	 -	 	 	 	 -	 	 	 	(20)	 	 	 	(0.07)	 	
Tax reform - deferred tax rate change3	 	 -	 	 	 	 -	 	 	 	 -	 	 	 	 -	 	 	 	(5)	 	 	 	(0.02)	 	
Tax reform-related item - employee bonus3	 	 -	 	 	 	 -	 	 	 	 -	 	 	 	7 	 	 	 	5 	 	 	 	0.02 	 	
Non-GAAP diluted EPS	 	 	 	 	 	 	 	 	$	6.07 	 	 	 	 	 	 	 	 	 	 	$	5.32 	 	
(1)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 costs primarily comprised of professional fees.
(2)Represents charges and adjustments associated with U.S. retail operating model changes for the periods ended February 1, 2020, and the closure of Best Buy Mobile stand-alone stores in the U.S. for the periods ended February 2, 2019.
(3)Represents adjustments to the provisional tax expense recorded in Q4 FY18 resulting from the Tax Cuts and Jobs Act of 2017 (“tax reform”) enacted into law in Q4 FY18, including adjustments associated with a deemed repatriation tax and the revaluation of deferred tax assets and liabilities, as well as adjustments to tax reform-related items announced in response to future tax savings created by tax reform, including a one-time bonus for certain employees.
(4)The non-GAAP adjustments relate primarily to adjustments in the U.S. and Canada. As such, the income tax charge is calculated using the statutory tax rate of 24.5% for the U.S. and 26.9% for Canada applied to the non-GAAP adjustments of each country.

11

 

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. Prior to Q3 FY20, the company provided a calculation of non-GAAP return on invested capital ("ROIC") that was defined as non-GAAP net operating profit after tax divided by average invested capital. Beginning in Q3 FY20, the company no longer provides non-GAAP ROIC but instead a calculation of non-GAAP ROI, 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 1, 20201	 	February 2, 20191	
Net earnings	$	1,541 	 	 	$	1,464 	 	
Total assets	 	15,953 	 	 	 	13,240 	 	
ROA	 	9.7 	%	 	 	11.1 	%	
﻿	 	 	 	 	 	 	 	
Non-GAAP Return on Investment ("ROI")	February 1, 20201	 	February 2, 20191	
Numerator	 	 	 	 	 	 	 	
Operating income - total operations	$	2,009 	 	 	$	1,900 	 	
Add: Non-GAAP operating income adjustments2	 	116 	 	 	 	88 	 	
Add: Operating lease interest3	 	113 	 	 	 	114 	 	
Less: Income taxes4	 	(548)	 	 	 	(512)	 	
Add: Depreciation	 	740 	 	 	 	748 	 	
Add: Operating lease amortization5	 	667 	 	 	 	645 	 	
Adjusted operating income after tax	$	3,097 	 	 	$	2,983 	 	
﻿	 	 	 	 	 	 	 	
Denominator	 	 	 	 	 	 	 	
Total assets	$	15,953 	 	 	$	13,240 	 	
Less: Excess cash6	 	(831)	 	 	 	(1,404)	 	
Add: Capitalized operating lease assets7	 	 -	 	 	 	3,032 	 	
Add: Accumulated depreciation and amortization8	 	6,712 	 	 	 	6,482 	 	
Less: Adjusted current liabilities9	 	(7,994)	 	 	 	(7,975)	 	
Average invested operating assets	$	13,840 	 	 	$	13,375 	 	
﻿	 	 	 	 	 	 	 	
Non-GAAP ROI	 	22.4 	%	 	 	  22.3	%	
	(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, acquisition-related transaction costs, restructuring charges and tax reform-related items. Additional details regarding these adjustments are included in the Reconciliation of Non-GAAP Financial Measures schedule within the company's quarterly 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. Historically, the company used an add-back multiple of 30% of annual rent expense; however, following the adoption of new lease accounting guidance in Q1 FY20 that resulted in the recognition of operating lease assets and operating lease liabilities on the balance sheet, the multiple was lowered and prior periods have been updated to reflect this change. For periods prior to FY20, the add-back is approximated by using a multiple of 15% of total rent expense. For periods beginning on or after FY20, 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)		Capitalized operating lease assets represent the estimated net assets that the company would record if the company's operating leases were owned. Historically, the company used a multiple of five times annual rent expense; however, following the adoption of new lease accounting guidance in Q1 FY20 that resulted in the recognition of operating lease assets and operating lease liabilities on the balance sheet, the multiple was lowered and prior periods have been updated to reflect this change. For periods prior to FY20, the asset is approximated by using a multiple of four times total rent expense. For periods beginning on or after FY20, capitalized operating lease assets are included within Total assets and therefore no adjustment is necessary.	
	(8)		Accumulated depreciation and amortization represents accumulated depreciation related to property and equipment and accumulated amortization related to definite-lived intangible assets.	
	(9)		Adjusted current liabilities represent total current liabilities less short-term debt and the current portions of operating lease liabilities and long-term debt.  	
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