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Best Buy Co Inc (NYSE:BBY)
Gross Margin
22.36% (As of Apr. 2014)

Gross Margin is calculated as gross profit divided by its revenue. Best Buy Co Inc's gross profit for the three months ended in Apr. 2014 was $2,020 Mil. Best Buy Co Inc's revenue for the three months ended in Apr. 2014 was $9,035 Mil. Therefore, Best Buy Co Inc's Gross Margin for the quarter that ended in Apr. 2014 was 22.36%.

BBY' s 10-Year Gross Margin Range
Min: 13.74   Max: 25.25
Current: 22.85

13.74
25.25

During the past 13 years, the highest Gross Margin of Best Buy Co Inc was 25.25%. The lowest was 13.74%. And the median was 23.68%.

BBY's Gross Marginis ranked lower than
100% of the Companies
in the Global Specialty Retail industry.

( Industry Median: vs. BBY: 22.85 )

Best Buy Co Inc had a gross margin of 22.36% for the quarter that ended in Apr. 2014 => Competition eroding margins

The 3-Year average Growth Rate of Gross Margin for Best Buy Co Inc was -0.40% per year.


Definition

Gross Margin is the percentage of Gross Profit out of sales or Revenue.

Best Buy Co Inc's Gross Margin for the fiscal year that ended in Jan. 2014 is calculated as

Gross Margin (A: Jan. 2014 )=Gross Profit (A: Jan. 2014 ) / Revenue (A: Jan. 2014 )
=9690 / 42410
=(Revenue - Cost of Goods Sold) / Revenue
=(42410 - 32720) / 42410
=22.85 %

Best Buy Co Inc's Gross Margin for the quarter that ended in Apr. 2014 is calculated as

Gross Margin (Q: Apr. 2014 )=Gross Profit (Q: Apr. 2014 ) / Revenue (Q: Apr. 2014 )
=2020 / 9035
=(Revenue - Cost of Goods Sold) / Revenue
=(9035 - 7015) / 9035
=22.36 %

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

A positive Gross Profit is only the first step for a company to make a net profit. The gross profit needs to be big enough to also cover related labor, equipment, rental, marketing/advertising, research and development and a lot of other costs in selling the products.


Explanation

Warren Buffett believes that firms with excellent long term economics tend to have consistently higher margins.

Durable competitive advantage creates a high Gross Margin because of the freedom to price in excess of cost. Companies can be categorized by their Gross Margin

1. Greater than 40% = Durable competitive advantage
2. Less than 40% = Competition eroding margins
3. Less than 20% = no sustainable competitive advantage
Consistency of Gross Margin is key

Best Buy Co Inc had a gross margin of 22.36% for the quarter that ended in Apr. 2014 => Competition eroding margins


Be Aware

If a company loses its competitive advantages, usually its gross margin declines well before its sales declines. Watching Gross Margin and Operating Margin closely helps avoid value trap situations.


Related Terms

Operating Margin, Cost of Goods Sold, Gross Profit, Revenue


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Best Buy Co Inc Annual Data

Feb04Feb05Feb06Feb07Feb08Feb09Feb10Feb11Feb12Jan14
Gross Margin 23.9223.6825.0524.4023.8524.4324.4725.2124.8022.85

Best Buy Co Inc Quarterly Data

Nov11Feb12Apr12Jul12Oct12Apr13Jul13Oct13Jan14Apr14
Gross Margin 24.2324.5225.0424.3123.7523.0926.5523.1820.0522.36
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