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Best Buy Co. Inc. Reports Operating Results (10-Q)

December 05, 2012 | About:

10qk

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Best Buy Co. Inc. (BBY) filed Quarterly Report for the period ended 2012-11-03.

Best Buy Co Inc has a market cap of $4.41 billion; its shares were traded at around $12.17 with a P/E ratio of 4.2 and P/S ratio of 0.1. The dividend yield of Best Buy Co Inc stocks is 5.2%. Best Buy Co Inc had an annual average earning growth of 13.9% over the past 10 years. GuruFocus rated Best Buy Co Inc the business predictability rank of 5-star.

Highlight of Business Operations:

The gross profit rate decreased by 1.6% of revenue in the third quarter of fiscal 2013. Gross profit rate declines in our Domestic and International segments each accounted for a decrease of 0.8% of revenue. For the first nine months of fiscal 2013, the gross profit rate decreased by 1.1% of revenue. Gross profit rate declines in our Domestic and International segments accounted for decreases of 0.6% of revenue and 0.5% of revenue, respectively. For further discussion of each segment s gross profit rate changes, see Segment Performance Summary below.

We recorded restructuring charges of $36 million and $254 million in the third quarter and first nine months of fiscal 2013, respectively, related primarily to our Domestic segment. We recorded no restructuring charges in the third quarter of fiscal 2012. In the first nine months of fiscal 2012, we recorded $4 million of restructuring charges related primarily to our Domestic segment. These restructuring charges resulted in a decrease in our operating income in the third quarter and first nine months of fiscal 2013 of 0.3% of revenue and 0.8% of revenue, respectively. The restructuring charges recorded in the first nine months of fiscal 2012 had no impact on our operating income rate. For further discussion of each segment s restructuring charges, see Segment Performance Summary below.

Operating income decreased $369 million, or 96.9%, and our operating income rate decreased to 0.1% of revenue in the third quarter of fiscal 2013, compared to 3.4% of revenue in the third quarter of fiscal 2012. For the first nine months of fiscal 2013, operating income decreased 72.1% to $307 million or, as a percentage of revenue, to 0.9%. The decrease in operating income and operating income rate was driven by operating losses from our International segment, compared to operating income in the prior-year periods and decreases in operating income from our Domestic segment compared to the prior-year periods. The operating income decreases in the current year periods were primarily due to lower revenue, a decrease in the gross profit rate and an increase in restructuring charges.

Our International segment experienced a gross profit decline of $89 million, or 10.9%, in the third quarter of fiscal 2013, driven primarily by revenue declines in Canada and China and a gross profit rate decline in Europe. The 2.8% of revenue decrease in the gross profit rate was driven by Europe with an increased mix of lower-margin wholesale sales, promotions as a result of increased price competition and higher-cost mobile phone handsets. For the first nine months of fiscal 2013, our International segment experienced a gross profit decline of $257 million, or 11.0%. The decrease in gross profit was primarily due to a gross profit decline in Europe due to the factors described above.

Our International segment s SG&A increased $45 million, or 1.5% of revenue, in the third quarter of fiscal 2013. The increase was driven by the absence of the Best Buy Mobile profit share-based management fee, which accounted for a reduction of $45 million in the third quarter of fiscal 2012, as SG&A spending was otherwise flat. Our International segment s SG&A increased $74 million, or 1.8% of revenue, in the first nine months of fiscal 2013, driven primarily by the absence of the Best Buy Mobile profit share-based management fee, which accounted for a $109 million reduction to SG&A in the first nine months of fiscal 2012, and increased spending related to new Five Star stores. Partially offsetting the increase in SG&A was lower spending in Europe and the favorable impact of foreign currency exchange rate fluctuations.

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