Enterprise Comparable Sales Increased
37.2%
GAAP Diluted EPS Increased 280% to
$2.32
Non-GAAP Diluted EPS Increased 233% to
$2.23
Raises Full-Year Enterprise Comparable Sales
Growth Outlook to a Range of 3% to 6%
Best Buy Co., Inc. (NYSE: BBY) today announced results for the
13-week first quarter ended May 1, 2021 (“Q1 FY22”), as compared to
the 13-week first quarter ended May 2, 2020 (“Q1 FY21”).
Q1 FY22
Q1 FY21
Revenue ($ in millions)
Enterprise
$
11,637
$
8,562
Domestic segment
$
10,841
$
7,915
International segment
$
796
$
647
Enterprise comparable sales % change1
37.2
%
(5.3)
%
Domestic comparable sales % change1
37.9
%
(5.7)
%
Domestic comparable online sales %
change1
7.6
%
155.4
%
International comparable sales %
change1
27.8
%
0.2
%
Operating Income
GAAP operating income as a % of
revenue
6.6
%
2.7
%
Non-GAAP operating income as a % of
revenue
6.4
%
2.9
%
Diluted Earnings per Share
("EPS")
GAAP diluted EPS
$
2.32
$
0.61
Non-GAAP diluted EPS
$
2.23
$
0.67
For GAAP to non-GAAP reconciliations of the measures referred to
in the above table, please refer to the attached supporting
schedule.
“Customer demand for technology products and services during the
quarter was extraordinarily high,” said Corie Barry, Best Buy CEO.
“This demand is being driven by continued focus on the home, which
encompasses many aspects of our lives including working, learning,
cooking, entertaining, redecorating and remodeling. The demand was
also bolstered by government stimulus programs and the strong
housing environment. Our teams across the organization met the
demand with remarkable execution. From our merchant and supply
chain teams working behind the scenes to our Blue Shirts and Geek
Squad agents on the front lines – our employees once again showed
amazing flexibility and execution managing extraordinary volumes.
Most importantly, they provided exceptional customer service in a
safe environment.”
Barry continued, “It has become evident throughout the pandemic
that technology is even more important to people’s lives, and we
are excited about what that means for our business going forward,
especially in combination with both the heightened technology
innovation that supports the more home-based way of work and life
and our unique ability to inspire and support our customers.”
Financial Outlook
Best Buy CFO Matt Bilunas said, “The year has clearly started
out much stronger than we originally expected. The sales momentum
is continuing into Q2 and we are raising our annual comparable
sales growth outlook. As we think about the back half of this year,
we expect shopping behavior will evolve as customers are able to
spend more time on activities like eating out, traveling and other
events. It is difficult to know exactly how that impacts our
business, especially as we lap particularly strong sales in the
back half of last year. Therefore, at this time, we are leaving our
original FY22 back-half sales assumptions unchanged.”
The company is providing the following outlook:
FY22:
- Enterprise comparable sales growth of 3% to 6%, which compares
to prior outlook of (-2%) to 1%
- Enterprise non-GAAP gross profit rate2 approximately flat to
the FY21 rate of 22.4%, which compares to prior outlook of slightly
below the FY21 rate of 22.4%
- Enterprise non-GAAP SG&A2 growth rate of 6% to 7%, which
compares to prior outlook of a growth rate in the low
single-digits
- Share repurchases of approximately $2.5 billion, which compares
to prior outlook of at least $2.0 billion
- Capital expenditures of $750 million to $850 million, which
remains unchanged
Q2 FY22:
- Enterprise comparable sales growth of approximately 17%
- Enterprise non-GAAP gross profit rate2 approximately flat to
the Q2 FY21 rate of 22.9%
- Enterprise non-GAAP SG&A2 growth of approximately 20%
Domestic Segment Q1 FY22
Results
Domestic Revenue
Domestic revenue of $10.84 billion increased 37.0% versus last
year. The increase was primarily driven by comparable sales growth
of 37.9%, which was partially offset by the loss of revenue from
permanent store closures in the past year.
From a merchandising perspective, the company generated
comparable sales growth across almost all its categories, with the
largest drivers being home theater, computing and appliances.
Domestic online revenue of $3.60 billion increased 7.6% on a
comparable basis, primarily due to higher average order values and
increased traffic. As a percentage of total Domestic revenue,
online revenue was 33.2% versus 42.2% last year.
Domestic Gross Profit Rate
Domestic gross profit rate was 23.3% versus 23.0% last year. The
gross profit rate increase of approximately 30 basis points was
primarily driven by improved product margin rates, including
reduced promotions, and rate leverage from supply chain costs.
These items were partially offset by increased installation and
delivery costs.
Domestic Selling, General and Administrative Expenses
(“SG&A”)
Domestic GAAP SG&A was $1.84 billion, or 16.9% of revenue,
versus $1.58 billion, or 19.9% of revenue, last year. On a non-GAAP
basis, SG&A was $1.82 billion, or 16.8% of revenue, versus
$1.56 billion, or 19.7% of revenue, last year. Both GAAP and
non-GAAP SG&A increased primarily due to: (1) increased
incentive compensation expense; (2) increased investments in
technology and in support of the company’s health initiatives; and
(3) increased variable expense related to the higher sales growth,
including items such as credit card processing fees.
International Segment Q1 FY22
Results
International Revenue
International revenue of $796 million increased 23.0% versus
last year. This increase was primarily driven by comparable sales
growth of 27.8% and the benefit of approximately 1,000 basis points
of favorable foreign currency exchange rates. These items were
partially offset by lower revenue in Mexico of $69 million, which
was a result of the company exiting operations from the country, as
previously announced on November 24, 2020.
International Gross Profit Rate
International GAAP gross profit rate was 23.7% versus 22.3% last
year. On a non-GAAP basis, the gross profit rate was 23.0% versus
22.3% last year. The higher GAAP and non-GAAP gross profit rates
were primarily driven by improved product margin rates. The GAAP
gross profit rate also included a $6 million benefit associated
with more favorable than expected inventory markdowns in
Mexico.
International SG&A
International SG&A was $152 million, or 19.1% of revenue,
versus $156 million, or 24.1% of revenue, last year. SG&A
decreased primarily due to the company’s exit of its Mexico
operations, partially offset by the unfavorable impact of foreign
exchange rates.
Restructuring Charges
A net restructuring credit of $42 million in Q1 FY22 included a
Domestic credit of $44 million, partially offset by International
net charges of $2 million. The Domestic restructuring credit was
primarily due to a reduction in expected termination benefits
resulting from adjustments to previously planned organizational
changes and higher-than-expected retention rates.
Income Taxes
The Q1 FY22 effective tax rate was 22.4% versus 27.4% last year.
On a non-GAAP basis, the effective tax rate was 22.5% versus 27.2%
last year. The lower GAAP and non-GAAP effective tax rates were
primarily due to an increase in the tax benefit from stock-based
compensation.
Dividends and Share
Repurchases
In Q1 FY22, the company returned a total of $1.1 billion to
shareholders through share repurchases of $927 million and
dividends of $175 million.
Today, the company announced its board of directors has
authorized the payment of a regular quarterly cash dividend of
$0.70 per common share. The quarterly dividend is payable on July
8, 2021, to shareholders of record as of the close of business on
June 17, 2021.
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 May 27, 2021. A
webcast of the call is expected to be available at
www.investors.bestbuy.com, both live and after the call.
Notes:
(1) Comparable sales include revenue from all stores that were
temporarily closed or operating an enhanced curbside-only operating
model as a result of COVID-19. The method of calculating comparable
sales varies across the retail industry, including the treatment of
store closures as a result of COVID-19. As a result, our method of
calculating comparable sales may not be the same as other
retailers’ methods. On November 24, 2020, the company announced its
decision to exit its operations in Mexico. As a result, all revenue
from Mexico operations has been excluded from the comparable sales
calculation beginning in fiscal December FY21. For additional
information on comparable sales, please see our most recent Annual
Report on Form 10-K, and any subsequent Quarterly Reports on Form
10-Q, filed with the Securities and Exchange Commission, and
available at www.investors.bestbuy.com.
(2) A reconciliation of the projected non-GAAP gross profit rate
and non-GAAP SG&A, which are forward-looking non-GAAP financial
measures, to the most directly comparable GAAP financial measures,
is not provided because the company is unable to provide such
reconciliation without unreasonable effort. The inability to
provide a reconciliation is due to the uncertainty and inherent
difficulty predicting the occurrence, the financial impact and the
periods in which the non-GAAP adjustments may be recognized. These
GAAP measures may include the impact of such items as restructuring
charges; price-fixing settlements; goodwill impairments; gains and
losses on investments; intangible asset amortization; certain
acquisition-related costs; and the tax effect of all such items.
Historically, the company has excluded these items from non-GAAP
financial measures. The company currently expects to continue to
exclude these items in future disclosures of non-GAAP financial
measures and may also exclude other items that may arise
(collectively, “non-GAAP adjustments”). The decisions and events
that typically lead to the recognition of non-GAAP adjustments,
such as a decision to exit part of the business or reaching
settlement of a legal dispute, are inherently unpredictable as to
if or when they may occur. For the same reasons, the company is
unable to address the probable significance of the unavailable
information, which could be material to future results.
Forward-Looking and Cautionary Statements:
This release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 as
contained in Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934 that reflect
management’s current views and estimates regarding future market
conditions, company performance and financial results, operational
investments, business prospects, new strategies, the competitive
environment and other events. You can identify these statements by
the fact that they use words such as “anticipate,” “believe,”
“assume,” “estimate,” “expect,” “intend,” “foresee,” “project,”
“guidance,” “plan,” “outlook,” and other words and terms of similar
meaning. These statements involve a number of risks and
uncertainties that could cause actual results to differ materially
from the potential results discussed in the forward-looking
statements. Among the factors that could cause actual results and
outcomes to differ materially from those contained in such
forward-looking statements are the following: the duration and
scope of the COVID-19 pandemic and its resurgence and the impact on
demand for our products and services, levels of consumer confidence
and our supply chain; the effects and duration of steps we have
taken and will continue to take in response to the pandemic,
including the implementation of our interim and evolving operating
model; actions governments, businesses and individuals have taken
and will continue to take in response to the pandemic and their
impact on economic activity and consumer spending; the pace of
recovery when the COVID-19 pandemic subsides; general economic
uncertainty in key global markets and a worsening of global
economic conditions or low levels of economic growth; competition
(including from multi-channel retailers, e-commerce business,
technology service providers, traditional store-based retailers,
vendors and mobile network carriers), our expansion strategies, our
focus on services as a strategic priority, our reliance on key
vendors and mobile network carriers, our ability to attract and
retain qualified employees, changes in market compensation rates,
risks arising from statutory, regulatory and legal developments,
macroeconomic pressures in the markets in which we operate, failure
to effectively manage our costs, our reliance on our information
technology systems, our ability to prevent or effectively respond
to a privacy or security breach, our ability to effectively manage
strategic ventures, alliances or acquisitions, our dependence on
cash flows and net earnings generated during the fourth fiscal
quarter, susceptibility of our products to technological
advancements, product life cycle preferences and changes in
consumer preferences, economic or regulatory developments that
might affect our ability to provide attractive promotional
financing, interruptions and other supply chain issues,
catastrophic events, health crises, pandemics, our ability to
maintain positive brand perception and recognition, product safety
and quality concerns, changes to labor or employment laws or
regulations, our ability to effectively manage our real estate
portfolio, constraints in the capital markets or our vendor credit
terms, changes in our credit ratings, any material disruption in
our relationship with or the services of third-party vendors, risks
related to our exclusive brand products and risks associated with
vendors that source products outside of the U.S., including trade
restrictions or changes in the costs of imports (including existing
or new tariffs or duties and changes in the amount of any such
tariffs or duties) and risks arising from our international
activities.
A further list and description of these risks, uncertainties and
other matters can be found in the company’s annual report and other
reports filed from time to time with the 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 19, 2021 and
its Quarterly Reports on Form 10-Q filed with the SEC. Best Buy
cautions that the foregoing list of important factors is not
complete, and any forward-looking statements speak only as of the
date they are made, and Best Buy assumes no obligation to update
any forward-looking statement that it may make.
BEST BUY CO., INC.
CONDENSED CONSOLIDATED
STATEMENTS OF EARNINGS
($ and shares in millions, except
per share amounts)
(Unaudited and subject to
reclassification)
Three Months Ended
May 1, 2021
May 2, 2020
Revenue
$
11,637
$
8,562
Cost of sales
8,922
6,597
Gross profit
2,715
1,965
Gross profit %
23.3
%
23.0
%
Selling, general and administrative
expenses
1,988
1,735
SG&A %
17.1
%
20.3
%
Restructuring charges
(42
)
1
Operating income
769
229
Operating income %
6.6
%
2.7
%
Other income (expense):
Investment income and other
3
6
Interest expense
(6
)
(17
)
Earnings before income tax expense and
equity in income of affiliates
766
218
Income tax expense
172
59
Effective tax rate
22.4
%
27.4
%
Equity in income of affiliates
1
-
Net earnings
$
595
$
159
Basic earnings per share
$
2.35
$
0.61
Diluted earnings per share
$
2.32
$
0.61
Weighted-average common shares
outstanding:
Basic
253.1
258.3
Diluted
256.7
260.4
BEST BUY CO., INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
($ in millions)
(Unaudited and subject to
reclassification)
May 1, 2021
May 2, 2020
Assets
Current assets:
Cash and cash equivalents
$
4,278
$
3,919
Short-term investments
60
-
Receivables, net
850
749
Merchandise inventories
5,721
3,993
Other current assets
359
335
Total current assets
11,268
8,996
Property and equipment, net
2,233
2,291
Operating lease assets
2,563
2,631
Goodwill
986
986
Other assets
655
701
Total assets
$
17,705
$
15,605
Liabilities and equity
Current liabilities:
Accounts payable
$
6,360
$
4,428
Unredeemed gift card liabilities
297
257
Deferred revenue
734
531
Accrued compensation and related
expenses
493
213
Accrued liabilities
978
769
Short-term debt
110
1,250
Current portion of operating lease
liabilities
654
683
Current portion of long-term debt
15
673
Total current liabilities
9,641
8,804
Long-term operating lease liabilities
1,983
2,076
Long-term liabilities
694
694
Long-term debt
1,229
621
Equity
4,158
3,410
Total liabilities and equity
$
17,705
$
15,605
BEST BUY CO., INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
($ in millions)
(Unaudited and subject to
reclassification)
Three Months Ended
May 1, 2021
May 2, 2020
Operating activities
Net earnings
$
595
$
159
Adjustments to reconcile net earnings to
total cash provided by operating activities:
Depreciation and amortization
216
207
Restructuring charges
(42
)
1
Stock-based compensation
37
15
Other, net
6
20
Changes in operating assets and
liabilities:
Receivables
210
383
Merchandise inventories
(90
)
1,136
Other assets
(6
)
(12
)
Accounts payable
(630
)
(816
)
Income taxes
113
31
Other liabilities
(304
)
(297
)
Total cash provided by operating
activities
105
827
Investing activities
Additions to property and equipment
(161
)
(178
)
Purchases of investments
(90
)
(5
)
Other, net
(2
)
4
Total cash used in investing
activities
(253
)
(179
)
Financing activities
Repurchase of common stock
(927
)
(62
)
Dividends paid
(175
)
(141
)
Borrowings of debt
-
1,250
Other, net
13
2
Total cash provided by (used in) financing
activities
(1,089
)
1,049
Effect of exchange rate changes on cash
and cash equivalents
5
(18
)
Increase (decrease) in cash, cash
equivalents and restricted cash
(1,232
)
1,679
Cash, cash equivalents and restricted
cash at beginning of period
5,625
2,355
Cash, cash equivalents and restricted
cash at end of period
$
4,393
$
4,034
BEST BUY CO., INC.
SEGMENT INFORMATION
($ in millions)
(Unaudited and subject to
reclassification)
Three Months Ended
Domestic Segment Results
May 1, 2021
May 2, 2020
Revenue
$
10,841
$
7,915
Comparable sales % change
37.9
%
(5.7
)%
Comparable online sales % change
7.6
%
155.4
%
Gross profit
$
2,526
$
1,821
Gross profit as a % of revenue
23.3
%
23.0
%
SG&A
$
1,836
$
1,579
SG&A as a % of revenue
16.9
%
19.9
%
Operating income
$
734
$
241
Operating income as a % of revenue
6.8
%
3.0
%
Domestic Segment Non-GAAP
Results1
Gross profit
$
2,526
$
1,821
Gross profit as a % of revenue
23.3
%
23.0
%
SG&A
$
1,816
$
1,559
SG&A as a % of revenue
16.8
%
19.7
%
Operating income
$
710
$
262
Operating income as a % of revenue
6.5
%
3.3
%
Three Months Ended
International Segment Results
May 1, 2021
May 2, 2020
Revenue
$
796
$
647
Comparable sales % change
27.8
%
0.2
%
Gross profit
$
189
$
144
Gross profit as a % of revenue
23.7
%
22.3
%
SG&A
$
152
$
156
SG&A as a % of revenue
19.1
%
24.1
%
Operating income (loss)
$
35
$
(12
)
Operating income (loss) as a % of
revenue
4.4
%
(1.9
)%
International Segment Non-GAAP
Results1
Gross profit
$
183
$
144
Gross profit as a % of revenue
23.0
%
22.3
%
SG&A
$
152
$
156
SG&A as a % of revenue
19.1
%
24.1
%
Operating income (loss)
$
31
$
(12
)
Operating income (loss) as a % of
revenue
3.9
%
(1.9
)%
(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
May 1, 2021
May 2, 2020
May 1, 2021
May 2, 2020
Computing and Mobile Phones
44
%
48
%
27.3
%
0.0
%
Consumer Electronics
30
%
28
%
45.9
%
(15.7)
%
Appliances
15
%
12
%
66.6
%
(2.0)
%
Entertainment
6
%
7
%
32.1
%
9.5
%
Services
5
%
5
%
33.2
%
(16.1)
%
Other
-
%
-
%
N/A
N/A
Total
100
%
100
%
37.9
%
(5.7)
%
Revenue Mix
Comparable Sales
Three Months Ended
Three Months Ended
International Segment
May 1, 2021
May 2, 2020
May 1, 2021
May 2, 2020
Computing and Mobile Phones
50
%
48
%
36.5
%
4.6
%
Consumer Electronics
27
%
27
%
23.9
%
(12.7)
%
Appliances
9
%
9
%
28.9
%
0.1
%
Entertainment
8
%
9
%
12.2
%
58.0
%
Services
4
%
5
%
7.8
%
(19.5)
%
Other
2
%
2
%
7.6
%
1.1
%
Total
100
%
100
%
27.8
%
0.2
%
BEST BUY CO., INC.
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES
($ in millions, except per share
amounts)
(Unaudited and subject to
reclassification)
The following information provides
reconciliations of the most comparable financial measures presented
in accordance with accounting principles generally accepted in the
U.S. (GAAP financial measures) to presented non-GAAP financial
measures. The company believes that non-GAAP financial measures,
when reviewed in conjunction with GAAP financial measures, can
provide more information to assist investors in evaluating current
period performance and in assessing future performance. For these
reasons, internal management reporting also includes non-GAAP
financial measures. Generally, presented non-GAAP financial
measures include adjustments for items such as restructuring
charges, price-fixing settlements, goodwill impairments, gains and
losses on investments, intangible asset amortization, certain
acquisition-related costs and the tax effect of all such items. In
addition, certain other items may be excluded from non-GAAP
financial measures when the company believes this provides greater
clarity to management and investors. These non-GAAP financial
measures should be considered in addition to, and not superior to
or as a substitute for, the GAAP financial measures presented in
this earnings release and the company’s financial statements and
other publicly filed reports. Non-GAAP financial measures as
presented herein may not be comparable to similarly titled measures
used by other companies.
Three Months Ended
Three Months Ended
May 1, 2021
May 2, 2020
Domestic
International
Consolidated
Domestic
International
Consolidated
Gross profit
$
2,526
$
189
$
2,715
$
1,821
$
144
$
1,965
% of revenue
23.3
%
23.7
%
23.3
%
23.0
%
22.3
%
23.0
%
Restructuring - inventory markdowns1
-
(6
)
(6
)
-
-
-
Non-GAAP gross profit
$
2,526
$
183
$
2,709
$
1,821
$
144
$
1,965
% of revenue
23.3
%
23.0
%
23.3
%
23.0
%
22.3
%
23.0
%
SG&A
$
1,836
$
152
$
1,988
$
1,579
$
156
$
1,735
% of revenue
16.9
%
19.1
%
17.1
%
19.9
%
24.1
%
20.3
%
Intangible asset amortization2
(20
)
-
(20
)
(20
)
-
(20
)
Non-GAAP SG&A
$
1,816
$
152
$
1,968
$
1,559
$
156
$
1,715
% of revenue
16.8
%
19.1
%
16.9
%
19.7
%
24.1
%
20.0
%
Operating income (loss)
$
734
$
35
$
769
$
241
$
(12
)
$
229
% of revenue
6.8
%
4.4
%
6.6
%
3.0
%
(1.9
)%
2.7
%
Restructuring - inventory markdowns1
-
(6
)
(6
)
-
-
-
Intangible asset amortization2
20
-
20
20
-
20
Restructuring charges3
(44
)
2
(42
)
1
-
1
Non-GAAP operating income (loss)
$
710
$
31
$
741
$
262
$
(12
)
$
250
% of revenue
6.5
%
3.9
%
6.4
%
3.3
%
(1.9
)%
2.9
%
Effective tax rate
22.4
%
27.4
%
Intangible asset amortization2
-
%
(0.2
)%
Restructuring charges3
0.1
%
-
%
Non-GAAP effective tax rate
22.5
%
27.2
%
Three Months Ended
Three Months Ended
May 1, 2021
May 2, 2020
Pretax Earnings
Net of Tax4
Per Share
Pretax Earnings
Net of Tax4
Per Share
GAAP diluted EPS
$
2.32
$
0.61
Restructuring - inventory markdowns1
$
(6
)
$
(6
)
(0.02
)
$
-
$
-
-
Intangible asset amortization2
20
15
0.05
20
15
0.06
Restructuring charges3
(42
)
(31
)
(0.12
)
1
1
-
Non-GAAP diluted EPS
$
2.23
$
0.67
(1)
Represents inventory markdown adjustments
recorded within cost of sales associated with the exit from
operations in Mexico.
(2)
Represents the non-cash amortization of
definite-lived intangible assets associated with acquisitions,
including customer relationships, tradenames and developed
technology.
(3)
Represents adjustments to previously
planned organizational changes and higher-than-expected retention
rates in the Domestic segment and charges and subsequent
adjustments associated with the decision to exit operations in
Mexico in the International segment for the period ended May 1,
2021. Represents charges associated with U.S. retail operating
model changes for the period ended May 2, 2020.
(4)
The non-GAAP adjustments primarily relate
to the U.S. and Mexico. As such, the income tax charge is
calculated using the statutory tax rate of 24.5% for all U.S.
non-GAAP items for all periods presented. There is no income tax
charge for Mexico non-GAAP items, as there was no tax benefit
recognized on these expenses in the calculation of GAAP income tax
expense.
Return
on Assets and Non-GAAP Return on Investment
The tables below provide calculations of
return on assets ("ROA") (GAAP financial measure) and non-GAAP
return on investment (“ROI”) (non-GAAP financial measure) for the
periods presented. The company believes ROA is the most directly
comparable financial measure to ROI. Non-GAAP ROI is defined as
non-GAAP adjusted operating income after tax divided by average
invested operating assets. All periods presented below apply this
methodology consistently. The company believes non-GAAP ROI is a
meaningful metric for investors to evaluate capital efficiency
because it measures how key assets are deployed by adjusting
operating income and total assets for the items noted below. This
method of determining non-GAAP ROI may differ from other companies'
methods and therefore may not be comparable to those used by other
companies.
Return on Assets ("ROA")
May 1, 20211
May 2, 20201
Net earnings
$
2,234
$
1,435
Total assets
18,955
16,125
ROA
11.8
%
8.9
%
Non-GAAP Return on Investment
("ROI")
May 1, 20211
May 2, 20201
Numerator
Operating income - total operations
$
2,931
$
1,904
Add: Non-GAAP operating income
adjustments2
287
120
Add: Operating lease interest3
110
112
Less: Income taxes4
(815
)
(523
)
Add: Depreciation
768
744
Add: Operating lease amortization5
665
667
Adjusted operating income after
tax
$
3,946
$
3,024
Denominator
Total assets
$
18,955
$
16,125
Less: Excess cash6
(4,434
)
(1,171
)
Add: Accumulated depreciation and
amortization7
7,152
6,852
Less: Adjusted current liabilities8
(9,752
)
(7,942
)
Average invested operating
assets
$
11,921
$
13,864
Non-GAAP ROI
33.1
%
21.8
%
(1)
Income statement accounts represent the
activity for the trailing 12 months ended as of each of the balance
sheet dates. Balance sheet accounts represent the average account
balances for the trailing 12 months ended as of each of the balance
sheet dates.
(2)
Non-GAAP operating income adjustments
include continuing operations adjustments for restructuring
charges, price-fixing settlements, intangible asset amortization
and acquisition-related transaction costs. 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. 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/20210527005161/en/
Investor Contact: Mollie O'Brien
mollie.obrien@bestbuy.com
Media Contact: Carly Charlson
carly.charlson@bestbuy.com
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