Discusses Insights from Successful ‘Renew
Blue’ Transformation
Shares Details on Plans to Expand What It
Sells and Evolve How It Sells
Provides Long-Term Financial Targets for
Fiscal 2021
Best Buy Co., Inc. (NYSE:BBY), a leading provider of consumer
electronics products and services, will host an investor conference
this afternoon to provide a more detailed overview of its Best Buy
2020: Building the New Blue growth strategy and discuss the
company’s long-term financial outlook.
Best Buy Chairman and CEO Hubert Joly and other members of the
executive team will discuss key insights gained from the company’s
successful Renew Blue transformation, share the company’s analysis
of the strategic landscape in which it operates and provide a
closer look at key growth initiatives.
“Our Renew Blue transformation was about improving the customer
experience and fixing what was broken,” Joly said. “Building on
what we have accomplished, we are excited by the opportunities we
have in this next chapter to grow the company by helping customers
pursue their passions and enrich their lives with the help of
technology, which is a much bigger idea and one that is rich with
opportunities.”
In addition to Joly, Best Buy’s investor day speakers will
include:
- Corie Barry, chief financial
officer
- Shari Ballard, senior executive vice
president and president of multichannel retail
- Mike Mohan, senior executive vice
president and chief merchandising and marketing officer
The event will begin at 2 p.m. ET. A video webcast of the
presentations and question-and-answer session will be available
online at www.investors.bestbuy.com, both live and after the
event.
Renew Blue recapWhen Best Buy unveiled its Renew Blue
transformation strategy in November 2012, the company faced two
fundamental problems: negative comparable sales and declining
operating income rate.
The strategy worked. Comparable sales and operating income rate
are up, non-GAAP earnings per share have grown at a compound annual
growth rate of 8 percent and total shareholder return over the last
five years was 263 percent, ranking in the top 10 percent of
S&P 500 companies. Importantly, the company proved it was
possible to win with a combination of competitive prices and a
higher level of service.
Best Buy 2020 overviewLooking ahead, the company believes
it is operating in an opportunity-rich environment, driven by
innovation and customers’ need for help.
Best Buy 2020 is designed to take advantage of key growth
opportunities by expanding what the company sells and evolving how
it sells.
Examples of how Best Buy intends to expand what it sells
include:
- Building a leading position in the
smart home market, by continuing to expand its curated assortment,
demonstrating new technology solutions in a meaningful way, and
entering the solutions and services part of the market. By the end
of October, the company will enhance the smart home areas in all of
its stores; roll out its Best Buy Smart Home Powered by Vivint home
automation and security offering to 450 stores; and add 1,500
dedicated smart home employees.
- Piloting a service, Assured Living,
that uses technology to help adult children remotely check in on
the health and safety of their aging parents. Now available in two
markets, this pilot aims to create peace of mind for the children
while allowing the parents to live and thrive independently.
- Launching Total Tech Support, a new
Geek Squad offering that provides ongoing support for a customer’s
tech, no matter where or when they bought it. This offering is
available nationwide in Canada and at 200 stores in 10 U.S.
cities.
Meanwhile, Best Buy is evolving how it sells to focus not on
just selling products but solving customers’ underlying needs. The
company will seek to accelerate its growth by continuing to improve
the customer experience within and across channels, more
effectively addressing customer needs in underpenetrated categories
and building its in-home channel.
To that end, Best Buy recently expanded its In-Home Advisor
program to all major U.S. markets. It now has 300 advisors who are
specially trained to provide free in-home consultations to help
customers find the right technology solutions for their unique
needs.
Financial outlookTo support the Best Buy 2020 strategy,
the company plans to make key investments in technology and people.
It is committed to continuing to create efficiencies that help fund
these investments and offset potential pressures.
Best Buy delivered $1.4 billion in cost savings over the last
five years. And, as previously announced, it plans to drive an
incremental $600 million in annualized cost savings by the end of
fiscal 2021.
As discussed earlier this year in March, with Best Buy 2020, the
company aspires to solve the following financial equation:
gradually increase its rate of topline growth, create efficiencies
to help fund investments and offset potential pressures, and build
more predictable revenue streams from recurring revenues and
stickier customer relationships.
Today Best Buy is setting new long-term financial targets for
fiscal 2021:
- Enterprise revenue of $43 billion
versus $39.4 billion in fiscal 2017, which was the last year of the
company’s Renew Blue transformation
- Non-GAAP operating income1 of $1.9
billion to $2.0 billion versus $1.7 billion in fiscal 2017
- Non-GAAP diluted EPS1 of $4.75 to
$5.00, which represents an 8 to 9 percent compound annual growth
rate from fiscal 2017
About Best BuyBest Buy is a leading provider of
technology products, services and solutions. The company offers
expert service at an unbeatable price more than 1.5 billion times a
year to the consumers, small business owners and educators who use
BestBuy.com or the Best Buy app, visit our stores and engage with
Geek Squad Agents. The company has operations in the U.S., where
more than 70 percent of the population lives within 15 minutes of a
Best Buy store, as well as in Canada and Mexico, where Best Buy has
an online and a physical presence.
(1) A reconciliation of the projected non-GAAP operating income
and non-GAAP diluted EPS, which are forward-looking non-GAAP
financial measures, to the most directly comparable GAAP financial
measures, is not provided because the company is unable to provide
such reconciliation without unreasonable effort. The inability to
provide a reconciliation is due to the uncertainty and inherent
difficulty predicting the occurrence, the financial impact and the
periods in which the non-GAAP adjustments may be recognized. These
GAAP measures may include the impact of such items as restructuring
charges; litigation settlements; goodwill impairments; gains and
losses on investments; 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.
For a “GAAP to non-GAAP” definition and reconciliations please
see the financial schedules on the company’s investor relations
website, www.investors.bestbuy.com. Fiscal 2017 GAAP operating
income was $1.9 billion and diluted EPS was $3.74.
Forward-Looking StatementsThis 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,” “assume,” “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: macro-economic
conditions (including fluctuations in housing prices, oil markets
and jobless rates), conditions in the industries and categories in
which the company operates, changes in consumer preferences or
confidence, changes in consumer spending and debt levels, the mix
of products and services offered for sale in the company’s physical
stores and online, credit market changes and constraints, product
availability, trade restrictions or changes in the costs of
imports, competitive initiatives of competitors (including pricing
actions and promotional activities), strategic and business
decisions of the company’s vendors (including actions that could
impact promotional support, product margin and/or supply), the
success of new product launches, the impact of pricing investments
and promotional activity, weather, natural or man-made disasters,
attacks on the company’s data systems, the company’s ability to
prevent or react to a disaster recovery situation, changes in law
or regulations, changes in tax rates, changes in taxable income in
each jurisdiction, tax audit developments and resolution of other
discrete tax matters, foreign currency fluctuation, the company’s
ability to manage its property portfolio, the impact of labor
markets, the company’s ability to retain qualified employees and
management, failure to achieve anticipated expense and cost
reductions, disruptions in the company’s supply chain, the costs of
procuring goods the company sells, failure to achieve anticipated
revenue and profitability increases from operational and
restructuring changes (including investments in the company’s
multi-channel capabilities), inability to secure or maintain
favorable vendor terms, failure to accurately predict the duration
over which the company will incur costs, development of new
businesses, failure to complete or achieve anticipated benefits of
announced transactions, and the company’s ability to protect
information relating to its employees and customers. 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
Report on Form 10-K filed with the SEC on March 24,
2017. 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.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170919005410/en/
Best Buy Co., Inc.Investor Contact:Mollie O’Brien,
612-291-7735Mollie.Obrien@bestbuy.comorMedia Contact:Jeff
Shelman, 612-291-6114Jeffrey.Shelman@bestbuy.com
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