Best Buy on Tuesday reported results for the first quarter of 2012. The electronics retail giant posted better-than-expected earnings per share, despite declining store sales. Revenue came in at $11.6 billion, ahead of analysts’ consensus of $11.52 billion, and non-GAAP earnings came in at $0.72 per share, up 11% from the same quarter in 2011 and beating the Street’s estimates of $0.59 per share. Domestic online revenue rose by 20%, and domestic mobile-phone sales increased by 13%. “Best Buy is in a turnaround, and the strategic priorities we laid out at the beginning of the year are just the first phase of the changes to come,” said Mike Mikan, CEO (interim) of Best Buy. “We know we have to better adapt to the new realities of the marketplace, and we are creating a long-term plan designed to make Best Buy more relevant with customers and position the company for sustained, profitable returns in the years ahead. First quarter results were in-line with our expectations, and we are reaffirming our previously provided annual guidance for fiscal 2013.” Best Buy’s press release follows below.

Best Buy Reports Fiscal First Quarter Results

GAAP diluted EPS of $0.47; adjusted (non-GAAP) diluted EPS up 11 percent to $0.72 Company building a new turnaround plan Full year guidance outlook unchanged FISCAL FIRST QUARTER PERFORMANCE SUMMARY(1) (U.S. dollars and square footage in millions, except per share and per square foot amounts) Three Months Ended May 5, 2012 April 30, 2011 Change Revenue $11,610 $11,369 2% Comparable store sales % change(2) (5.3%) (3.0%) N/A Gross profit as % of revenue 25.0% 25.7% (70bps) SG&A as % of revenue 21.7% 21.6% 10bps Restructuring charges $127 $4 N/A Operating income $262 $460 (43%) Operating income as a % of revenue 2.3% 4.0% (170bps) Diluted EPS from continuing operations $0.47 $0.64 (27%) Adjusted (non-GAAP) Results(3) Operating income $389 $464 (16%) Operating income as a % of revenue 3.4% 4.1% (70bps) Diluted EPS from continuing operations $0.72 $0.65 11% Key Metrics(4) Total U.S. big box retail square feet 42.4 42.5 0% Revenue per square foot (Domestic segment) $854 $854 0% Adjusted operating income per square foot (Domestic segment) $42 $48 (13%) Adjusted return on invested capital(5) 11.2% 11.2% 0bps Fiscal First Quarter 2013 Highlights Domestic segment online revenue growth of 20 percent Domestic segment mobile phones comparable store sales growth of 13 percent Domestic segment connections growth of 11 percent Domestic segment Services revenue increased approximately 11 percent, including the impact of the mindSHIFT acquisition Domestic segment comparable store sales growth in tablets, mobile phones, eReaders and appliances more than offset by declines in notebooks, gaming, digital imaging and televisions Closed 41 (effective May 12, 2012) of the 50 U.S. big box store closures planned for fiscal 2013 As expected, the International segment operating loss was driven primarily by lower revenue in Europe and China and increased competitive conditions in Europe MINNEAPOLIS, May 22, 2012 — Best Buy Co., Inc. (NYSE: BBY) today reported GAAP net earnings from continuing operations of $161 million, or $0.47 per diluted share, for the three months ended May 5, 2012 compared to net earnings from continuing operations of $255 million, or $0.64 per diluted share for the prior-year period. Excluding previously announced restructuring charges, adjusted (non-GAAP) net earnings from continuing operations for the first quarter was $246 million, or $0.72 per diluted share, compared to adjusted net earnings from continuing operations of $258 million, or $0.65 per diluted share, for the prior-year period. “Best Buy is in a turnaround, and the strategic priorities we laid out at the beginning of the year are just the first phase of the changes to come,” said Mike Mikan, CEO (interim) of Best Buy. “We know we have to better adapt to the new realities of the marketplace, and we are creating a long-term plan designed to make Best Buy more relevant with customers and position the company for sustained, profitable returns in the years ahead. First quarter results were in-line with our expectations, and we are reaffirming our previously provided annual guidance for fiscal 2013.” Revenue Three Months ended May 5, 2012 Prior-Year Period ($millions) Revenue Change YOY Comp. Store Sales Comp. Store Sales Domestic $8,822 5.1% (3.7%) (3.8%) International 2,788 (6.3%) (10.5%) (0.2%) Total $11,610 2.1% (5.3%) (3.0%) Total company revenue was $11.6 billion during the fiscal first quarter, an increase of 2.1 percent compared to the prior-year period, and included a comparable store sales decline of 5.3 percent. As a result of the company’s fiscal year change, the first quarter of fiscal 2013 included February 2012, which included a fifth (“extra”) week. Excluding the extra week, total company revenue declined 4.3 percent compared to the prior-year period. Areas of comparable store sales growth in the Domestic segment included tablets and mobile phones within the Computing & Mobile Phones revenue category, eReaders within the Consumer Electronics revenue category and Appliances. These increases were more than offset by comparable store sales declines primarily in notebooks within the Computing and Mobile Phones revenue category, gaming within the Entertainment revenue category, and digital imaging and televisions within the Consumer Electronics revenue category. The Domestic segment online channel revenue grew 20 percent compared to the prior-year period. International segment comparable store sales declined 10.5 percent. As the company previously discussed, first quarter sales were expected to be lower driven by declines in the Five Star business stemming from the expiration of government sponsored programs and a slowdown in the Chinese economy. The impact of the change in these programs was similarly felt by other retailers in China. Additionally, softness in notebooks, home theater and gaming resulted in comparable store declines in Canada, and the difficult macro environment and changes in network subsidies for the pre-pay U.K. phone market led to lower mobile phone sales in our Europe business. Gross Profit Three Months ended May 5, 2012 ($millions) Gross Profit Change YOY % of Revenue Domestic $2,233 4% 25.3% International 674 (13%) 24.2% Total $2,907 (0%) 25.0% Domestic segment gross profit dollars increased 4 percent, including the extra week, and included a rate decline of 30 basis points compared to the prior-year period. The primary factors influencing this Domestic segment rate decline were lower computer repair revenue and the continuing shift from one-time transactions to ongoing “Tech Support” memberships, partially offset by favorability from a higher sales mix of mobile phones. International segment gross profit dollars declined 13 percent and included a 180 basis point rate decline. This rate decline was due primarily to a more competitive pricing environment and the increased mix of lower margin smartphones in our Europe business. Selling, General and Administrative Expenses (“SG&A”) Three Months ended May 5, 2012 ($millions) SG&A Change YOY % of Revenue Domestic $1,811 2% 20.5% International 707 4% 25.4% Total $2,518 2% 21.7% Total company SG&A spending increased 2 percent compared to the prior-year period. Excluding the effect of the extra week, total company SG&A spending experienced a slight decline. Year-over-year SG&A comparisons for both Domestic and International segments were impacted by the absence of the Best Buy Mobile profit share payment as a result of the purchase of Carphone Warehouse plc’s (“CPW”) share of the Best Buy Mobile profit share agreement in the fourth quarter of fiscal 2012. These intercompany profit share payments previously increased Domestic segment SG&A expense while lowering International segment SG&A and had no impact on the company’s consolidated operating income. Operating Income Three Months ended May 5, 2012 ($millions) Operating Income Change YOY % of Revenue Domestic $295 (19%) 3.3% International (33) n/a (1.2%) Total $262 (43%) 2.3% Adjusted operating income – Domestic $422 14% 4.8% Adjusted operating income – International (33) n/a (1.2%) Adjusted operating income(2) $389 (16%) 3.4% Operating income of $262 million included $127 million in restructuring charges primarily related to employee severance and fixed asset impairments, as a result of actions taken during the quarter to reduce headcount and close stores. Excluding these charges, adjusted operating income for the quarter declined 16 percent to $389 million driven by declines in the International segment. Please see the table titled “Reconciliation of Non-GAAP Financial Measures” attached to this release for more detail. Share Repurchases and Dividends The company repurchased $115 million, or 4.6 million shares, of its common stock at an average price of $25.07 per share during February 2012, the first month of the fiscal first quarter. Consistent with previous guidance, the company continues to expect repurchases of approximately $750 million to $1.0 billion in fiscal 2013. On May 10, 2012, the company paid a quarterly dividend of $0.16 per common share outstanding, or $55 million in the aggregate. Fiscal 2013 Annual Guidance Unchanged The company is maintaining its fiscal 2013 outlook of adjusted (non-GAAP) diluted EPS in the range of $3.50 to $3.80, including the impact of expected share repurchases and excluding fiscal 2013 restructuring costs. The company’s estimates for pre-tax restructuring charges in fiscal 2013 related to its strategic imperatives outlined on March, 29, 2012 is a range of $300 to $350 million, including store closures, severance, asset impairments and other costs. Including these charges, the GAAP diluted EPS annual guidance is expected in the range of $2.85 to $3.25. Please see “Reconciliation of Non-GAAP Guidance” attached to this release for more detail.

Almost two months after Apple unveiled its latest tablet, the new iPad continues to see shipping delays when ordered online. Availability of the device in the U.S. continues to improve, however, with the shipping quotes now whittled down to under a week for the first time since the slate launched in March. Orders through Apple’s online store are now expected to ship in 3 to 5 business days, although international customers will still be forced to wait between 1 and 2 weeks. If the wait is still too long, Best Buy and other retail outlets are said to have plenty of stock. The Cupertino-based company previously said demand for the new tablet was “off the charts.” In the first quarter of 2012, Apple sold 11.8 million tablets.

[Via SlashGear]

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Following Best Buy’s announcement that it would shutter 50 retail locations as part of an effort to cut costs, one market research firm said it believes the decline of big-box consumer electronics retailers in the United States and Europe will continue. Canalys said in a report on Tuesday that it expects more big-name retailers to follow in the footsteps of companies like Best Buy Europe, CompUSA and Circuit City, which filed for bankruptcy in 2008 before closing all of its retail stores and selling its online brand. Big-box retailers’ failure to adapt as aggressive online companies such as Amazon grew rapidly is seen as the root cause of their woes. “They were hit by a perfect storm of competition from the Internet and supermarkets,” Canalys CEO Steve Brazier said in a statement. ”They lost too much business to competitors undercutting them on price and failed to respond to the many attractions of Amazon’s online approach, such as its vast stock ranges, peer reviews, recommendations, free delivery and excellent returns services.” Brazier continued, “Today’s consumers are even willing to browse for a book in a local store then order it from Amazon at a higher price simply because they want Amazon to understand their entire library, to optimize future recommendations. This is more than ‘showrooming’ – this signals a fundamental shift in consumer perception of value.” Canalys’s full press release follows below.

Expect more famous retailers to disappear

- Services and experiences are key to retailers’ survival

Shanghai, Palo Alto, Singapore and Reading – 17 April 2012

Market analyst firm Canalys predicts that many more consumer electronics (CE) retailers will follow in the footsteps of Surcouf, Best Buy Europe, CompUSA and Circuit City and disappear from the high streets of Europe and the United States. It describes this as a result of the ‘strategic failure’ of the CE retailing model and warns retail chains in other segments to learn quickly from the mistakes of the fallen.

‘They were hit by a perfect storm of competition from the Internet and supermarkets. They lost too much business to competitors undercutting them on price and failed to respond to the many attractions of Amazon’s online approach, such as its vast stock ranges, peer reviews, recommendations, free delivery and excellent returns services,’ said Canalys CEO, Steve Brazier. ‘Today’s consumers are even willing to browse for a book in a local store then order it from Amazon at a higher price simply because they want Amazon to understand their entire library, to optimize future recommendations. This is more than “showrooming” – this signals a fundamental shift in consumer perception of value.’

As well as online competition, supermarkets have proved adept at running promotions for low-end products, and are often willing to sacrifice margins to bring customers to their stores.

‘They have the locations and the parking facilities, which make them convenient for collection of heavier items,’ added Alastair Edwards, Canalys Principal Analyst. ‘Many have good online tools and make deliveries too. In many countries, supermarkets are the most efficient route for shipping a single product in high volumes.’

Edwards pointed out that CE retailers in Europe saw their lucrative extended warranty business undermined too, by the EU’s insistence that two-year warranties be provided as standard. Their content businesses have also collapsed: most have seen their vinyl, film, film processing, CD and now DVD businesses disappear. Kindle and iPad apps are removing opportunities in books and magazines. Software applications and gaming are transferring to online and download businesses too.

‘The future for multi-specialists, such as the much respected FNAC in France, looks as bleak as for the more hardware-focused companies,’ Edwards continued. ‘CE retailers now offer very few benefits to consumers. They appeal to the rapidly shrinking proportion of people who are unable or unwilling to shop online. They enable impulse buying and they allow somebody to pick up a product immediately, rather than the next day. But that’s about all.’

The growth of Internet shopping should not have come as a surprise to the retailers; the threat has been building for 15 years or more. Yet, as a group, they failed spectacularly to respond. Most now have online stores to complement their shops, but in nearly every mature market they are the distant followers, not the leaders, of Internet retail.

‘The window of opportunity has closed; they will never catch up with the Internet specialists. They started late, under-invested and could not build a culture to excite talented programmers. Their Internet businesses were held back by them not wanting to undercut in-store prices,’ Edwards said. ‘They wrongly assumed the benefits of “touch and feel” would continue to protect them, but a new generation of consumers has grown up with a different way of thinking. The success of online fashion retailing is a strong indicator that no category is safe from this change in behavior; other retailers should take note.’

What path, then, should the remaining CE retailers take? Some will look towards Asia, but Canalys points out that, although Internet shopping is still a niche activity in some countries, for example Thailand and Singapore, it is booming in China. It is not wise, therefore, to assume safety in emerging markets.

Canalys suggests that some may explore becoming genuine showrooms – that demonstrate but do not sell – but this will require funding from vendors. Some will no doubt look at Apple and argue that its iconic stores have redefined modern retailing. They provide a luxury setting in prestigious locations and offer a range of services from free hints and tips, to paid-for classroom training. They partner with artists and create events to attract the crowds. They offer one-to-one sales engagement to maximize accessory and upsell opportunities. They also integrate closely with the online shop by offering mixed services such as ‘reserve online, collect tomorrow’.

Few can doubt the wisdom of Apple’s approach while it sits on its perch as the most successful company in the world, but the attraction of the stores to Apple may be more about the company’s ability to control the brand and customer experience than anything to do with retailing economics. Chris Jones, Canalys VP and Principal Analyst, raised a key question:

‘Do the stores attract the customers, or do customers come simply because Apple’s products are so popular? Competitors should be extremely cautious before trying to emulate Apple’s approach. The product ranges of most other companies are unlikely to generate customer traffic at anything like a similar rate.’

Canalys predicts that, by 2020, many city centers will look quite different from today, with many famous retailers disappearing.

‘People will seek retail premises out for a number of reasons: for experiences centered around entertainment, relaxation and education; for events, such as celebrity appearances, performances and signings; for socialization and sustenance; and where brand exclusivity or the nature of specialization or service required cannot be met by online alternatives,’ said Edwards. ‘A great innovator may find a way to build a next-generation outlet that can shift CE goods while offering some of these experiences, but it is more likely that the majority of CE retail chains in mature markets will simply disappear within the next five years.’

Best Buy on Tuesday announced that its director and chief executive officer Brian Dunn has resigned from the company effective immediately. Director G. Mike Mikan has been named interim CEO as the company searches for a new chief executive. “I have enjoyed every one of my 28 years with this company, and I leave it today in position for a strong future. I am proud of my fellow employees and I wish them the best,” Dunn said in a statement. Best Buy recently announced plans to shutter 50 retail stores as part of an effort to cut costs, and the company missed Wall Street’s revenue consensus when it reported its fourth-quarter earnings last month. Best Buy’s stock is trading up 2.75% on the news. The company’s full press release follows below.

UPDATE: StarTribune reports that an investigation into personal misconduct led to Dunn’s resignation.

Best Buy Announces Leadership Transition
Interim CEO Named to Lead Company

INNEAPOLIS–(BUSINESS WIRE)–The board of directors of Best Buy Co., Inc. (NYSE:BBY) today announced that Brian Dunn has resigned as chief executive officer and director. There were no disagreements between Mr. Dunn and the company on any matter relating to operations, financial controls, policies or procedures. There was mutual agreement that it was time for new leadership to address the challenges that face the company. Director G. Mike Mikan has been named interim CEO to lead the company while a search for a new CEO is underway. Richard Schulze, the founder of Best Buy, continues to serve as chairman.

“We thank Brian Dunn for his many years of service to the company and wish him well in his next endeavors”

“I have enjoyed every one of my 28 years with this company, and I leave it today in position for a strong future. I am proud of my fellow employees and I wish them the best,” said Dunn.

“We thank Brian Dunn for his many years of service to the company and wish him well in his next endeavors,” said Schulze. “As we move forward, we are very pleased to have a strong leader with Mike Mikan’s credentials as interim CEO.”

“The Best Buy team and I will be extremely focused on successfully managing this period of transition. I want to assure our employees, customers and other key stakeholders that we will work together to achieve our company’s growth and profitability goals,” said Mikan.

Mikan, who will remain on the board while serving as interim CEO, has been a Best Buy director since April 2008. He formerly served as executive vice president and chief financial officer of UnitedHealth Group Incorporated and chief executive officer of Optum, a health care services company and affiliate of UnitedHealth. Mikan has strong financial and operational expertise, as well as public company leadership experience.

A search committee of the board of directors has been created consisting of the founder and members of the nominating, corporate governance and policy committee. The committee will oversee the process for the identification and selection of the next CEO.

Best Buy on Thursday reported results for the fourth fiscal quarter of 2012. The nationwide retail giant had missed Wall Street’s estimates in both the second and third fiscal quarters, and it posted mixed results in the fourth quarter. Revenue came in at $16.6 billion compared to analysts’ consensus of $17.15 billion, and non-GAAP earnings of $2.47 per share, up 25% from the same quarter in fiscal 2011, beating the Street’s $2.15 EPS consensus. ”In order to help make technology work for every one of our customers and transform our business as the consumer electronics industry continues to evolve, we are taking major actions to improve our operating performance,” said Best Buy CEO Brian J. Dunn. ”As part of our multi-channel strategy, we intend to strengthen our portfolio of store formats and footprints — closing some big box stores, modifying others to our enhanced Connected Store format, and adding Best Buy Mobile stand-alone locations — all to provide a better shopping environment for our customers across multiple channels while increasing points of presence, and to improve performance and profitability.” After jumping more than 3% in pre-market trading, shares of Best Buy stock were down 7% shortly after the market opened on Thursday. The company’s full press release follows below.

Best Buy Reports Fiscal Fourth Quarter and Full Year 2012 Results

Outlines New Transformation Strategy Describes Specific Actions to Improve Business Performance – Fourth Quarter and Full Year EPS: GAAP: loss of ($4.89) in the fourth quarter; ($3.36) for the full year, inclusive of previously announced charges Adjusted (non-GAAP): profit of $2.47 in the fourth quarter, up 25 percent; $3.64 for the full year, up 6 percent – Transformation Strategy to Focus on: Multi-year cost reduction program U.S. store format improvements Growth initiatives  Improved customer experience – Actions to Improve Business Performance: $800 million in planned cost reductions by fiscal 2015; $250 million in fiscal 2013 Reductions to fund investments in enhanced customer experience and growth initiatives Launch Connected Store full market test in the Twin Cities and San Antonio in fiscal 2013 Closure of 50 U.S. big box stores in fiscal 2013 Opening of 100 U.S. Best Buy Mobile small format stand-alone stores in fiscal 2013 Plans to grow Domestic segment online revenue 15 percent in fiscal 2013 – Fiscal 2013 EPS Outlook GAAP:  $2.85 to $3.25 Adjusted (non-GAAP): $3.50 to $3.80, up 3 to 12 percent vs fiscal 2012 EPS of $3.39 (as recast for new fiscal year) MINNEAPOLIS, March 29, 2012 — Best Buy Co., Inc. (NYSE: BBY) today reported a GAAP net loss of ($1.7) billion, or ($4.89) per share, for its fourth quarter ended March 3, 2012 compared to net income of $651 million, or $1.62 per diluted share for the prior-year period. The fiscal fourth quarter 2012 results include $2.6 billion of charges primarily related to the actions announced on November 7, 2011, which consist of the purchase of Carphone Warehouse Group plc’s (CPW) share of the Best Buy Mobile profit share agreement and related costs, a non-cash impairment charge to reflect the write-off of Best Buy Europe goodwill, and restructuring charges (primarily associated with U.K. big box pilot store closures). Excluding the above charges, adjusted (non-GAAP) diluted earnings per share for the fourth quarter were $2.47, an increase of 25 percent when compared to adjusted diluted earnings per share of $1.98 for the prior-year period. Comparable store sales for the quarter declined 2.4 percent compared to a decline of 4.7 percent for the prior-year period. For the fiscal year ended March 3, 2012, GAAP loss per share totaled ($3.36) compared to diluted earnings per share of $3.08 in fiscal 2011. Adjusted (non-GAAP) diluted earnings per share for the fiscal year totaled $3.64, an increase of 6 percent when compared to the previous year’s adjusted diluted earnings per share of $3.43. Comparable store sales for the fiscal year declined 1.7 percent compared to a decline of 1.8 percent for the prior-year period. Please see “Reconciliation of Non-GAAP Financial Measures” attached to this release and on the investor relations website, www.investors.bestbuy.com, for more detail. ACTIONS TO TRANSFORM BUSINESS OPERATIONS “In order to help make technology work for every one of our customers and transform our business as the consumer electronics industry continues to evolve, we are taking major actions to improve our operating performance,” said Brian J. Dunn, CEO of Best Buy. “As part of our multi-channel strategy, we intend to strengthen our portfolio of store formats and footprints — closing some big box stores, modifying others to our enhanced Connected Store format, and adding Best Buy Mobile stand-alone locations — all to provide a better shopping environment for our customers across multiple channels while increasing points of presence, and to improve performance and profitability. “These changes will also help lower our overall cost structure. We intend to invest some of these cost savings into offering new and improved customer experiences and competitive prices — which will help drive revenue. And, over time, we expect some of the savings will fall to the bottom line. At the same time, we will continue to accelerate our key initiatives — growing connections and services, expanding our digital capabilities and growing our business in China. “As a result, we believe these actions will position us to grow earnings, improve ROIC, and increase value to our shareholders in the years ahead.” $800 Million Multi-year Cost Reduction Program In order to be more efficient and align the company with the opportunities that will provide the greatest returns, the company is taking significant actions to lower its cost base: Planning $800 million in cost reductions by fiscal 2015; including approximately $250 million in fiscal 2013. The planned Domestic segment reductions include: Retail stores: $300 million Corporate and support structure: $300 million Cost of goods sold: $200 million. Specific actions intended to lower costs are expected to include: The closure of 50 U.S. Best Buy big box stores in fiscal 2013. Cost savings in corporate and support structure from IT services savings, procurement savings on non merchandise purchases, a reduction in outside consultant services and reduction of approximately 400 positions in our corporate and support areas. Savings in cost of goods sold driven by reduction of product transition costs, lower product return and exchange expenses and supply chain efficiencies. U.S. Store Format Improvements Best Buy’s retail store strategy is to increase points of presence, while decreasing overall square footage, for increased flexibility in a multi-channel environment. The company intends to remodel key stores with a new Connected Store format in fiscal 2013, and to continue to build out the successful Best Buy Mobile small format stores throughout the U.S. Based on results from store pilots conducted in 2010 and 2011, Best Buy will be deploying “at-scale” market tests of its new Connected Store format in the Twin Cities and San Antonio metro areas. The store remodels are expected to be completed before the 2012 holiday season. Connected Stores are remodeled big box stores that focus on connections(1), services and multi-channel experience through a total transformation of both the store and the operating environment. The company expects total big box square footage in these combined test markets to be reduced by almost 20 percent through store downsizing and closures, while points of presence will increase by more than 20 percent. Best Buy expects to open another 100 U.S. Best Buy Mobile small format stores in fiscal 2013 and continues to expect to have a total of 600 to 800 such stores by fiscal 2016 (from 305 today). Growth Initiatives Best Buy plans to invest to maximize the long-term opportunities offered through its existing four key growth initiatives: e-commerce, connections, services and China. Domestic segment online sales are expected to grow 15 percent in fiscal 2013 and the company continues to expect to reach $4 billion by fiscal 2016. As announced earlier this month, Stephen Gillett has been named to the newly created role of executive vice president and president, Best Buy Digital and Global Business Services to lead the company’s global digital strategy. Connections in the U.S. are targeted to grow 15 percent in fiscal 2013, driven by continued mobile phone growth and increased connections in other product categories including tablets and computing. Revenue from Domestic segment services category is expected to grow 10 percent in fiscal 2013. In China, the company plans to open 50 new Five Star stores in fiscal 2013, including 14 new mobile store-within-a-store concepts, and continues to target $4 billion in sales and a total of 400 to 500 (from 204 today) Five Star stores by fiscal 2016. Improved Customer Experience Best Buy plans to expand the benefits under its Reward Zone Silver loyalty program, whose members account for a significant percentage of the company’s profit. Reward Zone Silver customers will receive exciting enhancements including free expedited shipping, premier access to many of the most popular products and major sales events, a free house call from the Geek Squad, and 60-day no hassle returns and price-match policy. As part of the company’s actions to significantly improve the customer experience, Best Buy will be making important changes later this year to its store operating model that are designed to drive a differentiated employee experience. The company plans to introduce a new store labor model to be implemented in all of its U.S. big box stores before the 2012 holiday season that will provide increased store employee training and a new enhanced compensation plan that introduces financial incentives for delivering on customer service and business goals. The new compensation plan, which will be implemented across the company later this year, is based on a model that has been used successfully in the company’s Best Buy Mobile stores. FOURTH QUARTER AND FULL YEAR FISCAL 2012 FINANCIAL RESULTS As announced November 7, 2011, net operating results from the closed Best Buy stores in the U.K., China and Turkey, along with other recently sold businesses, are now treated as discontinued operations. All information regarding the company’s operating results, unless otherwise noted, pertains to its continuing operations. FISCAL FOURTH QUARTER PERFORMANCE SUMMARY (U.S. dollars in millions, except per share amounts) Three Months Ended Mar. 3, 2012 Feb. 26, 2011 Change GAAP Revenue $16,630 $16,083 3% Comparable store sales % change(2) (2.4%) (4.7%) – Gross profit $4,057 $3,929 3% SG&A $2,765 $2,654 4% Restructuring charges $16 $138 (88%) Goodwill impairment charge $1,207 – – Operating income $69 $1,137 (94%) Diluted EPS from continuing operations ($4.73) $1.84 n/a Diluted EPS, including discontinued operations ($4.89) $1.62 n/a Adjusted (non-GAAP) Results(3) Gross profit as % of revenue 24.5% 24.5% 0bps SG&A as % of revenue 16.3% 16.5% (20bps) Operating income $1,357 $1,284 6% Operating income as % of revenue 8.2% 8.0% 20bps Diluted EPS from continuing operations $2.50 $2.07 21% To facilitate comparison to prior results and expectations, the following table presents key line items that reflect adjusted (non-GAAP) results from both continuing and discontinued operations. Please see “Reconciliation of Non-GAAP Financial Measures” attached to this release for more detail. Three Months Ended Mar. 3, 2012 Feb. 26, 2011 Change Adjusted (non-GAAP) Results, including both continuing and discontinued operations(4) Revenue $16,730 $16,256 3% Gross profit as % of revenue 24.5% 24.4% 10bps SG&A as % of revenue 16.5% 16.9% (40bps) Operating income $1,326 $1,227 8% Operating income as % of revenue 7.9% 7.5% 40bps Diluted EPS $2.47 $1.98 25% Fiscal Fourth Quarter 2012 Highlights Domestic segment online revenue growth of 21 percent Domestic segment mobile phones comparable store sales growth of 20 percent Domestic segment connections growth of 13 percent Domestic segment tablets and eReaders comparable store sales each increased low triple-digits Domestic segment comparable store sales declines in gaming, notebooks, digital imaging and televisions International gross profit rate improvement of 120 basis points Share repurchases of $317 million (12.8 million shares) Fiscal Full Year 2012 Highlights Comparable store sales decline of (1.7) percent Estimated gain in total market share in the Domestic segment Domestic segment online revenue growth of 18 percent Domestic segment mobile phones comparable store sales growth of 13 percent Domestic segment connections growth of 11 percent International adjusted operating income dollars increased 17 percent Free cash flow of $2.5 billion(5) Share repurchases of $1.5 billion (54.6 million shares) Closed U.K. big box pilot stores to refocus Best Buy Europe on 2,400 small format stores Purchased CPW’s interest in Best Buy Mobile profit share agreement in the U.S. and Canada to more fully capitalize on the significant and growing connections opportunity Revenue Three Months ended March 3, 2012 Prior-Year Period ($millions) Revenue Change YOY Comp. Store Sales Comp. Store Sales Domestic $12,600 4.2% (2.2%) (5.5%) International 4,030 1.1% (2.9%) (1.7%) Total $16,630 3.4% (2.4%) (4.7%) Total company revenue was $16.6 billion during the fiscal fourth quarter, an increase of 3.4 percent compared to the prior-year period and included a comparable store sales decline of 2.4 percent. Excluding the 53rd week in the fourth quarter of fiscal 2012, total company revenue declined 1.1 percent compared to the prior-year period. The Domestic segment areas of comparable store sales growth included tablets and mobile phones within the Computing & Mobile Phones revenue category and eReaders within the Consumer Electronics revenue category. These increases were more than offset by comparable store sales declines in other areas, including gaming within the Entertainment revenue category, notebooks within the Computing and Mobile Phones category and digital imaging and televisions within the Consumer Electronics revenue category. The Domestic segment online channel delivered a 21 percent revenue increase compared to the prior-year period. The International segment comparable store sales decline was primarily driven by industry softness in gaming, home theater and digital imaging in Canada and lower connections in Europe given the difficult macro environment, partially offset by gains in Five Star stores in China. Gross Profit Three Months ended March 3, 2012 ($millions) Gross Profit Change YOY % of Revenue Domestic $3,015 2% 23.9% International 1,042 6% 25.9% Total $4,057 3% 24.4% Adjusted gross profit – Domestic $3,034 3% 24.1% Adjusted gross profit – International 1,042 6% 25.9% Adjusted gross profit(3) $4,076 4% 24.5% Excluding restructuring charges, Domestic segment adjusted gross profit dollars increased 3 percent including the 53rd week and represented a rate decline of 40 basis points. The primary factor influencing this Domestic segment rate decline was a larger mix of lower-margin promotional small and mid-size televisions. International segment gross profit dollar growth of 6 percent was the result of a rate increase of 120 basis points driven by improvements from stores throughout the International segment. Selling, General and Administrative expenses (“SG&A”) Three Months ended March 3, 2012 ($millions) SG&A Change YOY % of Revenue Domestic $1,932 1% 15.3% International 833 13% 20.7% Total $2,765 4% 16.6% Adjusted SG&A – Domestic $1,932 1% 15.3% Adjusted SG&A – International 787 7% 19.5% Adjusted SG&A(3) $2,719 2% 16.3% In the Domestic segment, focused cost control activities resulted in only 1 percent growth in SG&A spending compared to the prior-year period. The International segment’s SG&A includes $46 million in costs related to the purchase of CPW’s share of the Best Buy Mobile profit share agreement. Excluding those expenses, International segment adjusted SG&A spending increased 7 percent, driven primarily by the absence of a Best Buy Mobile profit share payment, which historically was an increase in Domestic segment SG&A and a reduction in International segment SG&A, and new store openings in Canada. Total company adjusted SG&A dollar spending increased 2 percent and as a percent of revenue improved 20 basis points. Excluding the effect of the 53rd week, total company adjusted SG&A spending was approximately flat. Operating Income Three Months ended March 3, 2012 ($millions) Operating Income Change YOY % of Revenue Domestic $1,077 8% 8.5% International (1,008) n/a n/a Total $69 (94%) 0.4% Adjusted operating income – Domestic $1,102 6% 8.7% Adjusted operating income – International 255 2% 6.3% Adjusted operating income(3) $1,357 6% 8.2% Excluding restructuring charges, costs related to the purchase of CPW’s share of the Best Buy Mobile profit share agreement and the goodwill impairment, adjusted operating income for the quarter increased 6 percent to $1.4 billion, or 8.2 percent of revenue, compared to $1.3 billion, or 8.0 percent of revenue, for the prior-year period. Please see the table titled “Reconciliation of Non-GAAP Financial Measures” attached to this release for more detail. Free Cash Flow, Share Repurchases and Dividends Fiscal 2012 free cash flow was $2.5 billion, primarily driven by effective management of inventory levels and the timing of several working capital items at the end of the previous fiscal year. During the fourth quarter, the company repurchased $317 million, or 12.8 million shares, of its common stock at an average price of $24.76 per share. For the full year, the company repurchased $1.5 billion, or 54.6 million shares, of its common stock at an average price of $27.47 per share. On January 24, 2012, the company paid a quarterly dividend of $0.16 per common share outstanding, or $56 million in the aggregate. Fiscal Year Change  As announced on November 7, 2011, Best Buy will change its fiscal year to end the Saturday nearest the end of January, effective starting in the first quarter of fiscal 2013. Below is detail on the quarterly periods for fiscal 2013, which includes 53 weeks: 1st Fiscal Quarter: Feb. / March / April January 29, 2012 to May 5, 2012 2nd Fiscal Quarter: May / June / July May 6, 2012 to August 4, 2012 3rd Fiscal Quarter: Aug. / Sept. / Oct. August 5, 2012 to November 3, 2012 4th Fiscal Quarter: Nov. / Dec. / Jan. November 4, 2012 to February 2, 2013 Under the new fiscal year, fiscal 2013 will include 53 weeks, while the recast fiscal 2012 includes 52 weeks. The company’s annual report for fiscal 2013 on Form 10-K will cover the 11-month period of March 4, 2012, to February 2, 2013. For important information on the fiscal year change, including fiscal 2011 and 2012 financial statements recast for the new fiscal year, please visit the company’s investor relations website,www.investors.bestbuy.com. Fiscal 2013 Annual Guidance  The following guidance is based on the company’s new fiscal year. Fiscal 2013 comprises the 53-week period ending on February 2, 2013, and fiscal 2012 now comprises the 52-week period ending on January 28, 2012. Revenue expected in the range of $50.0 billion to $51.0 billion, reflecting a comparable store sales decline in the range of 2 to 4 percent. These expected results are compared with fiscal 2012 revenue of $50.0 billion and comparable store sales decline of 2.1 percent (recast for the new fiscal year). Adjusted (non-GAAP) operating income dollars expected to decrease 4 to 11 percent when compared to adjusted operating income for fiscal 2012 from continuing operations (recast for the new fiscal year) of $2.3 billion. Adjusted operating income dollars expected to be in the range of a 4 percent decline to 4 percent growth when compared to adjusted operating income for fiscal 2012 from total operations (including both continuing and discontinued operations recast for the new fiscal year) of $2.1 billion. Adjusted (non-GAAP) diluted EPS expected in the range of $3.50 to $3.80, including the expected repurchase of approximately $750 million to $1.0 billion of common shares and excluding fiscal 2013 restructuring costs related to the transformation strategy outlined above. This reflects growth of 3 to 12 percent over the fiscal 2012 adjusted EPS based on the new fiscal year of $3.39. The company’s preliminary estimates for pre-tax restructuring charges in fiscal 2013 related to its transformation strategy outlined above is a range of $300 to $350 million, including store closures, severance, asset impairments and other costs. Including these charges, the preliminary GAAP diluted EPS is expected in the range of $2.85 to $3.25. Please see “Reconciliation of Non-GAAP Guidance” attached to this release for more detail. For more information on the fiscal year change, including fiscal 2011 and fiscal 2012 financial statements recast for the new fiscal year, please visit the company’s investor relations website, www.investors.bestbuy.com.

iPad launch day is quite a fiasco. Apple Stores around the country see eager customers line up hours or even days ahead of the tablet’s release, and people often wait hours before they finally make it into the store to purchase an iPad — if there are any left. While there was still plenty of hype surrounding this year’s launch, it didn’t quite seem the same. Apple’s new iPad is a big upgrade compared to the previous model, featuring a faster dual-core A5X processor with quad-core graphics, an upgraded 5-megapixel camera, optional embedded 4G LTE, a slightly redesigned case and a gorgeous better-than-1080p HD Retina Display. But launch day still seemed much more subdued than it was for the release of the original iPad and the iPad 2. Read on for more.

BGR called a dozen Apple Stores in and around New York City between 5:00 p.m. and 5:30 p.m. EDT on Friday in order to find out whether or not they still had the new iPad in stock. In years past, checks like these were fielded by apologetic sales associates breaking the news that launch-day inventory had been completely depleted. This year, however, we didn’t find a single store in the New York area that reported a complete stock-out.

Of the 12 Apple Store we spoke with, each and every one still had iPad Wi-Fi inventory available, with just four stores saying that 64GB models were sold out in both black and white. Most stores reported having a significant number of units still in stock and several said they would likely still have inventory tomorrow. “We have plenty left,” one sales representative replied when asked if there would likely be any units remaining later this evening. “Take your time.”

Four stores reported being completely out of iPad Wi-Fi + 4G models, and five more said they were out of the AT&T version of Apple’s new tablet but still had the Verizon Wireless model in stock.

When we asked if there were still people waiting on line for iPads, we were told by a representative at the Grand Central Apple Store that there was indeed still a 30-minute line for new iPads. The only other store to mention a line was in New Jersey, and the sales associate chuckled as she reported, “Yeah, there’s three people on line right now.”

A number of Apple’s retail partners received launch-day iPad inventory as well, and we called a handful of Best Buy locations to see if the story would change at all. We still didn’t speak to a single location that reported a stock-out, however. Workers at three Best Buy stores said that all or most models were still in stock and a fourth said that AT&T models were completely depleted but “plenty” of 16GB and 32GB Verizon models were still available. A salesperson at Best Buy Columbus Circle in Manhattan reported that the iPad has been “flying off the shelves,” but he said that all Wi-Fi models and both Wi-Fi + 4G models were still in stock when we called shortly after 6:15 p.m.

At the time of this writing, the real-time iPad tracker set up by Chitika indicated that Apple’s new iPad accounted for just over 2.1% of iPad traffic across its network.

Apple stated earlier this week that pre-orders were sold out and demand for the new iPad was “off the charts.” Did the majority of day-one iPad buyers pre-order their tablets online this year? Did Apple finally manage to build more than enough tablets to meet demand? Or is the new iPad just not resolutionary enough to warrant the turn-out we have seen in years past? We won’t know for sure until Monday when, or if, Apple shares launch-weekend sales figures. In the meantime, if you want a new iPad and you haven’t yet picked one up, odds seem pretty good that you can still find one fairly easily if New York area availability is any indication.

At launch, AT&T and Verizon will be the exclusive carriers of the new 4G-enabled iPad in the United States. In the spring, however, Sprint will also be launching its own 4G LTE network. With the carrier already selling Apple’s flagship smartphone, users were shocked to see the Cupertino-based company shun its new partner’s network — but this may not be the case. According to images obtained by Engadget, Sprint iPad models have begun to show up in Best Buy’s inventory system. Nothing is confirmed at this point, but it is possible that a Sprint iPad could launch around the same time as the carrier’s first batch of 4G LTE smartphones. A second image of Best Buy’s system can be seen after the break.

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Apple is all but confirmed to be planning a press conference for March 7th during which it will unveil its next-generation iPad tablet. The iPad 3 is expected to feature a high-definition 2,048 x 1,536-pixel Retina Display along with a faster quad-core Apple A6 processor, embedded 4G LTE, an upgraded rear camera and a redesigned case. There is no question that the new iPad will be a significant upgrade compared to the current model, but not everyone needs the latest and greatest. For those willing to forgo the added speed, embedded LTE and HD display, Best Buy is now offering $50 off every iPad 2 model it carries. Of course buying the iPad 2 now at a $50 discount is a risky move — a number of reports have suggested that Apple will continue to sell its current tablet at a discount of $100 or more once the next-generation iPad 3 launches next month.

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Consumer technology hardware sales in the United States fell 0.5% percent in 2011, ending the year just shy of $144 billion according to market research firm The NPD Group. Roughly 60% of all sales were from PCs, TVs, tablets, eReaders, mobile phones and video game hardware, NPD said. Computers generated the most revenue with nearly $28 billion or roughly 20% of sales, with tablets and eReaders doubling sales to $15 billion in 2011. For the second year in a row, Apple led all consumer electronics brands and was the only one to increase sales during the holiday quarter, posting a 36% year-over-year increase. The Cupertino-based company accounted for 19% percent of all sales, almost double second-ranked Hewlett-Packard. Best Buy was the top retailer for the second year in a row, followed by Walmart and Apple respectively, with Staples and Amazon tied for fourth place. Online, direct mail and TV shopping channel sales increased 7% and accounted for 24% of all sales, up from 22% in 2010. Read on for NPD’s press release.

Apple tops 2011 as the #1 Brand and Best Buy is the #1 Retailer

PORT WASHINGTON, NEW YORK, FEBRUARY 13, 2012 – U.S. consumer technology hardware and consumable sales* fell just one half of a percent in 2011 ending the year at nearly $144 billion, according to leading market research company The NPD Group.

Nearly 60 percent of all sales in 2011 were driven by the top five categories; PCs, TVs, tablets/e-readers, mobile phones, and video game hardware, according to NPD’s Retail and Consumer tracking services and Mobile Phone Track. PCs (notebooks and desktops) generated the most revenue with nearly $28 billion in sales, accounting for almost 20 percent of sales, but that figure was a decline of 3 percent from 2010. Tablets/e-readers were the clear winner in 2011, nearly doubling sales to $15 billion in 2011.

“U.S. hardware sales growth is becoming harder and harder to achieve at the broad industry level,” said Stephen Baker, vice president of industry analysis at NPD. “Sales outside of the top five categories fell by 8 percent in 2011 as consumers shifted spending from older technologies to a narrow range of products.”

Apple benefited from this shift as it was the leading consumer electronics brand for the second year in a row. Among the top five brands Apple was the only one to experience a sales increase, posting a 36 percent rise over 2010. By the critical fourth quarter Apple accounted for 19 percent of all sales dollars, almost twice as much as number two Hewlett-Packard.

Top 5 U.S. Brands Based on 2011 Revenue

Brand Sales Growth/Decline
Apple 36%
Hewlett-Packard -3%
Samsung -6%
Sony -21%
Dell -17%
Source: The NPD Group/Consumer Tracking Service, Retail Tracking Service, and Mobile Phone Track

At the retailer level, Best Buy came out on top once again, followed by Walmart and Apple. Staples and Amazon tied for fourth place to round out the top five, a repeat of 2010.

Sales through online, direct mail, and TV shopping channels jumped 7 percent and accounted for 24 percent of all sales, up from 22 percent in 2010. Sales through these non-retail channels captured 25 percent of industry revenue in the fourth quarter of 2011.

“While in-store sales fell about 2.5 percent in 2011, the growth in online volumes for retailers meant that retail name plates still accounted for well over four of every five dollars spent on CE hardware in the US,” said Baker. “Despite their sales strength, retail stores still face serious challenges in 2012 as volumes in the traditional CE categories, which once carried these stores, continue to slide. It shouldn’t be forgotten, however, that a large majority of mobile phones and tablets/e-readers (the two fastest growing CE categories) have mostly been driven through in-store experiences.”

Apple will launch its own HDTV called the “iTV,” analyst Peter Misek of Jefferies & Company said on Monday. We’ve written dozens of reports on Apple’s alleged upcoming HDTV, and most speculate that the device will run a version of iOS along with the company’s Siri voice engine that will remove the need for a traditional remote control. Misek also said that Apple is in talks to partner with carriers such as Verizon Wireless and AT&T for access to exclusive and non-exclusive content, Bloomberg reported on Monday. Best Buy recently leaked possible details on the iTV and the retailer’s survey suggested the device will have a 42-inch display and a $1,499 price tag. The TV could launch near the middle of this year, although a recent report suggested that the television’s launch might be pushed back due to limited display availability.

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Best Buy has reportedly been testing the waters for a possible “iTV” offering from Apple. According to The Verge, the retail giant has been circulating a customer survey that provides some very specific details about an Apple HDTV to gauge consumer interest. Here are the details:

• 42-inch 1080 LED display
• Runs iOS
• App Store functionality
• iCloud for access to all your music, TV shows, movies, photos, and videos
• iPhone and iPad as a remote control with AirPlay to push content from your devices to the TV
• Built-in FaceTime camera and microphone (we’d imagine Siri, as well)
• Netflix, YouTube, Flickr support
• $1,499 price

This list, while detailed, could be easily have been put together by anyone familiar with Apple’s current Apple TV product, though the 42-inch display size and price of $1,499 could be solid indications of what we can expect from Apple. The Cupertino-based company is rumored to be preparing to launch its first HDTV featuring iOS and Siri later this year.

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During the Consumer Electronics Show in Las Vegas, Best Buy announced that it will reorganize part of its business to focus on sales of connected devices such as tablets, smartphones and computers. Best Buy has created a new retail “connectivity business group,” Forbes said Friday, that will sell the aforementioned devices in Best Buy Mobile and Best Buy retail stores with 3G and 4G wireless service plans. Forbes explained that the connectivity business group (CBG) is similar to Best Buy Mobile but incorporates more devices and will include 15,000 employees from Best Buy Mobile and another 20,000 from Best Buy retail stores who previously worked to sell tablets and computers. Consumers likely won’t see any form of CBG branding and the changes will mostly affect Best Buy’s training practices for its Best Buy and Best Buy Mobile stores. Both stores will sell the products and Best Buy Mobile will likely begin offering connected laptops and tablets in addition to its current smartphone catalog.

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Last week rumors began to circulate that Apple was planning to open itsy bitsy retail stores in as many as 25 Target locations. During a presentation on Thursday, Target confirmed that it will have 25 stores featuring “special displays” of Apple products. Neither company has provided details on the partnership, however it will likely be similar to Apple’s deal with Best Buy, which sells the company’s products from dedicated mini stores within more than 600 Best Buy locations.

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Apple may be planning to open retail stores inside as many as 25 Target locations, according to recent rumors. The partnership would likely be similar to Apple’s deal with Best Buy, which sells the Cupertino-based company’s products from dedicated mini-stores within more than 600 Best Buy locations. AppleInsider said Friday that Apple is likely interested in Target so that it can offer its products in markets that are too small for a full blown Apple Store. Apple’s senior vice president of retail operations, Ron Johnson, once served as an executive at Target, so there is a new link between the two companies that could add some weight to this rumor.

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Best Buy on Friday reported weaker than expected revenue for the five weeks ended December 31st, 2011. The company noted $8.4 billion in revenue, which was flat compared to the same period last year but included a comparable store sales decline of 1.2%. The company’s international segment generated $1.9 billion in revenue, a 1.7% decrease and a 4.3% drop off in store sales. Its domestic segment generated $6.5 billion in revenue, which was up 0.4% from the same period last year but it also represented a 0.4% drop in store sales. Read on for more.

“Based on our performance in December we continue to expect to achieve our annual guidance, despite customer traffic that was lower than expected until the last week before Christmas, which resulted in December revenue that was slightly lower than our expectations,” Best Buy CEO Brian Dunn said. “The actions we have taken during the year to improve our performance online and in key connectable products such as tablets, eReaders and smart phones continued to deliver strong growth in December.”

Cell phones helped drive domestic revenue and mobile-related store sales increased 20% over December of last year. Domestic tablet and eReader store sales jumped into the low triple-digits and domestic online channel sales increased 26%. Best Buy’s full press release follows below.

Best Buy Reports December Revenue of $8.4 Billion

Continued strong growth online and in connected products including mobile phones, tablets and eReaders
Company reaffirms fiscal 2012 EPS guidance range

Fiscal 2012 December Revenue Summary
(U.S. dollars in billions)
	Revenue		Revenue % Change		Fiscal Dec. 2012  Comparable Store Sales % Change(1)		Fiscal Dec.  2011  Comparable Store Sales % Change(1)
Total company	$8.4		0.0%		(1.2%)		(4.0%)
Domestic segment	$6.5		0.4%		(0.4%)		(5.0%)
International segment	$1.9		(1.7%)		(4.3%)		(0.1%)

December Highlights

• Domestic segment online channel sales increased 26 percent
• Domestic segment tablets and eReaders comparable store sales each increased low triple-digits
• Domestic segment mobile phones comparable store sales increased 20 percent

MINNEAPOLIS, Jan. 6, 2012 — Best Buy Co., Inc. (NYSE: BBY), a leading multi-channel global retailer and developer of technology products and services, today reported revenue for the five weeks ended Dec. 31, 2011, of $8.4 billion, which was flat compared to the prior-year period and included a comparable store sales decline of 1.2 percent.

“We built off of share gains in the third quarter to deliver December sales that we believe compared favorably to the retail CE industry,” said Brian J. Dunn, CEO of Best Buy. “Based on our performance in December we continue to expect to achieve our annual guidance, despite customer traffic that was lower than expected until the last week before Christmas, which resulted in December revenue that was slightly lower than our expectations. The actions we have taken during the year to improve our performance online and in key connectable products such as tablets, eReaders and smart phones continued to deliver strong growth in December. I want to thank our employees for their significant dedication to serving our customers during this key holiday period.”

The company’s Domestic segment generated $6.5 billion in revenue for fiscal December, an increase of 0.4 percent when compared with the prior-year period. The Domestic segment’s revenue performance was driven by the addition of new stores in the past 12 months, partially offset by a comparable store sales decline of 0.4 percent. Domestic segment areas of comparable store sales growth included tablets and mobile phones within the Computing & Mobile Phones revenue category, eReaders within the Consumer Electronics revenue category, and the Appliances revenue category. Tablets and eReaders each delivered low triple-digit comparable store sales gains during the month. Mobile phones had a 20 percent comparable store sales increase during the month, driven by strong smart phone sales. These increases were more than offset by comparable store sales declines in other areas, including gaming within the Entertainment revenue category and digital imaging within the Consumer Electronics revenue category. Gaming and digital imaging both experienced low double-digit declines in comparable store sales. The company noted that televisions experienced a mid single-digit comparable store sales decline within the Consumer Electronics revenue category. The company also noted that overall Domestic segment inventory levels finished fiscal December in line with its expectations.

The Domestic segment online channel delivered a 26 percent revenue increase compared to the prior-year period, driven by a strong traffic increase and momentum from share gains achieved in November.

The International segment’s fiscal December revenue totaled $1.9 billion, a decrease of 1.7 percent versus the prior-year period. The revenue decline was driven primarily by a comparable store sales decline of 4.3 percent and unfavorable fluctuations in foreign currency exchange rates, partially offset by the addition of new stores in the past 12 months. The International segment comparable store sales decline was driven by comparable store sales declines in our stores in Canada and Europe. Sales results for all countries in the International segment other than Canada are reported on a two-month lag.

Company Reaffirms Fiscal 2012 Annual EPS Guidance Range 
The company is confirming its annual adjusted diluted EPS guidance in the range of $3.35 to $3.65 as previously disclosed in its press release dated December 13, 2011. This guidance includes the estimated impact from fiscal 2012 share repurchases and excludes the gain on the sale of investments and previously announced charges, which are comprised of the purchase of CPW’s share of the Best Buy Mobile profit share agreement, a non-cash impairment charge to reflect the write-down of Best Buy Europe goodwill, restructuring charges (primarily associated with U.K. big-box store closures) and other related charges.

The company’s annual guidance reflects basic EPS loss calculated in accordance with accounting principles generally accepted in the U.S. (“GAAP”) in the range of ($3.52) to ($3.17). This loss is primarily driven by charges attributable to Best Buy outlined above which total approximately $2.6 billion in fiscal 2012. Please see table titled “Reconciliation of Non-GAAP Guidance” attached to this release for further details.

(1) Best Buy’s comparable store sales is comprised of revenue at stores, call centers, and Web sites operating for at least 14 full months as well as  revenue related to other comparable sales channels. Relocated, remodeled and expanded stores are excluded from the comparable store sales calculation until at least 14 full months after reopening. Acquired stores are included in the comparable store sales calculation beginning with the first full quarter following the first anniversary of the date of the acquisition. The portion of the calculation of the comparable store sales percentage change attributable to the International segment excludes the effect of fluctuations in foreign currency exchange rates. The method of calculating comparable store sales varies across the retail industry. As a result, Best Buy’s method of calculating comparable store sales may not be the same as other retailers’ methods.

Forward-Looking and Cautionary Statements:
This news 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, 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,” “estimate,” “expect,” “intend,” “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: general economic conditions, changes in consumer preferences, credit market constraints, acquisitions and development of new businesses, divestitures, product availability, sales volumes, pricing actions and promotional activities of competitors, profit margins, weather, natural or man-made disasters, changes in law or regulations, foreign currency fluctuation, availability of suitable real estate locations, the company’s ability to react to a disaster recovery situation, the impact of labor markets and new product introductions on overall profitability, failure to achieve anticipated benefits of announced transactions and integration challenges relating to new ventures, consummation of the transaction with Carphone Warehouse Group plc and unanticipated costs associated with previously announced or future restructuring 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, including, but not limited to, Best Buy’s Annual Report on Form 10-K filed with the SEC on April 25, 2011. 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.