Comparable Sales Declined 2.9%
GAAP Diluted EPS Increased 4% to
$1.26
Non-GAAP Diluted EPS Decreased 2% to
$1.26
Best Buy Co., Inc. (NYSE: BBY) today announced results for the
13-week third quarter ended November 2, 2024 (“Q3 FY25”), as
compared to the 13-week third quarter ended October 28, 2023 (“Q3
FY24”).
Q3 FY25
Q3 FY24
Revenue ($ in millions)
Enterprise
$
9,445
$
9,756
Domestic segment
$
8,697
$
8,996
International segment
$
748
$
760
Enterprise comparable sales % change1
(2.9
)%
(6.9
)%
Domestic comparable sales % change1
(2.8
)%
(7.3
)%
Domestic comparable online sales %
change1
(1.0
)%
(9.3
)%
International comparable sales %
change1
(3.7
)%
(1.9
)%
Operating Income
GAAP operating income as a % of
revenue
3.7
%
3.6
%
Non-GAAP operating income as a % of
revenue
3.7
%
3.8
%
Diluted Earnings per Share
("EPS")
GAAP diluted EPS
$
1.26
$
1.21
Non-GAAP diluted EPS
$
1.26
$
1.29
For GAAP to non-GAAP reconciliations of the measures referred to
in the above table, please refer to the attached supporting
schedule.
“In the third quarter, our teams delivered an in-line non-GAAP
operating income rate on sales that were a little softer than
expected,” said Corie Barry, Best Buy CEO. “During the second half
of the quarter, a combination of the ongoing macro uncertainty,
customers waiting for deals and sales events, and distraction
during the run-up to the election, particularly in non-essential
categories, led to softer-than-expected demand. In the first few
weeks of Q4, as holiday sales have begun and the election is behind
us, we have seen customer demand increase again.”
“We are excited and feel well-positioned for the holiday season
with compelling deals, inspirational in-store and digital
merchandising and competitive fulfillment options,” Barry
continued. “We continue to see a consumer who is seeking value and
sales events, and one who is also willing to spend on high
price-point products when they need to or when there is new,
compelling technology. Thus, we are balancing our optimism in both
the industry and our unique positioning with a pragmatic approach
to likely uneven customer behavior going forward.”
FY25 Financial Guidance
“We are adjusting our full year comparable sales guidance to a
decline in the range of 2.5% to 3.5%,” said Matt Bilunas, Best Buy
CFO. “At the same time, we are maintaining our full year non-GAAP
operating income rate of 4.1% to 4.2%, which represents slight
expansion compared to FY24 on a 52-week basis.”
Bilunas continued, “For Q4 FY25, we expect comparable sales
versus last year to be flat to down 3% and our non-GAAP operating
income rate to be in the range of 4.6% to 4.8%.”
Best Buy’s updated guidance for FY25 is the following:
- Revenue of $41.1 billion to $41.5 billion, which compares to
prior guidance of $41.3 billion to $41.9 billion
- Comparable sales1 of (3.5%) to (2.5%), which compares to prior
guidance of (3.0%) to (1.5%)
- Enterprise non-GAAP operating income rate2 of 4.1% to 4.2%,
which is unchanged
- Non-GAAP effective income tax rate2 of approximately 23.5%,
which compares to prior guidance of approximately 24.0%
- Non-GAAP diluted EPS2 of $6.10 to $6.25, which compares to
prior guidance of $6.10 to $6.35
- Capital expenditures of approximately $750 million, which is
unchanged
Note: FY25 has 52 weeks compared to 53 weeks in FY24. The
company estimates the impact of the extra week in Q4 FY24 added
approximately $735 million in revenue, approximately 15 basis
points of non-GAAP operating income rate and approximately $0.30 of
non-GAAP diluted EPS to the full-year results.
Domestic Segment Q3 FY25
Results
Domestic Revenue
Domestic revenue of $8.70 billion decreased 3.3% versus last
year primarily driven by a comparable sales decline of 2.8%.
From a merchandising perspective, the largest drivers of the
comparable sales decline on a weighted basis were appliances, home
theater and gaming. These drivers were partially offset by growth
in the computing, tablets and services categories.
Domestic online revenue of $2.73 billion decreased 1.0% on a
comparable basis, and as a percentage of total Domestic revenue,
online revenue was 31.4% versus 30.6% last year.
Domestic Gross Profit Rate
Domestic gross profit rate was 23.6% versus 22.9% last year. The
higher gross profit rate was primarily due to improved financial
performance from the company’s services category, including its
membership offerings, which was partially offset by lower
profit-sharing revenue from the company’s private label and
co-branded credit card arrangement and lower product margin
rates.
Domestic Selling, General and Administrative Expenses
(“SG&A”)
Domestic GAAP SG&A expenses were $1.72 billion, or 19.7% of
revenue, versus $1.73 billion, or 19.2% of revenue, last year. On a
non-GAAP basis, SG&A expenses were $1.71 billion, or 19.7% of
revenue, versus $1.71 billion, or 19.0% of revenue, last year. GAAP
SG&A decreased $11 million, which included lower intangible
asset amortization of approximately $10 million. Both GAAP and
non-GAAP SG&A included higher advertising expense, which was
partially offset by lower incentive compensation.
International Segment Q3 FY25
Results
International Revenue
International revenue of $748 million decreased 1.6% versus last
year primarily driven by a comparable sales decline of 3.7% and the
negative impact from foreign exchange rates, which were partially
offset by revenue from Best Buy Express locations that have opened
in Canada during FY25.
International Gross Profit Rate
International gross profit rate was 22.5% versus 22.1% last
year. The higher gross profit rate was primarily due to growth in
the higher margin services category.
International SG&A
International SG&A expenses were $155 million, or 20.7% of
revenue, versus $151 million, or 19.9% of revenue, last year. The
higher SG&A expense was primarily driven by expenses associated
with new Best Buy Express locations.
Share Repurchases and
Dividends
In Q3 FY25, the company returned a total of $339 million to
shareholders through dividends of $202 million and share
repurchases of $137 million. On a year-to-date basis, the company
has returned a total of $892 million to shareholders through
dividends of $607 million and share repurchases of $285 million.
The company still expects to spend approximately $500 million on
share repurchases during FY25.
Today, the company announced that its board of directors has
authorized the payment of a regular quarterly cash dividend of
$0.94 per common share. The quarterly dividend is payable on
January 7, 2025, to shareholders of record as of the close of
business on December 17, 2024.
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 November 26,
2024. A webcast of the call is expected to be available at
www.investors.bestbuy.com, both live and after the call.
Notes:
(1) The method of calculating comparable sales varies across the
retail industry. As a result, our method of calculating comparable
sales may not be the same as other retailers’ methods. For
additional information on comparable sales, please see our most
recent Annual Report on Form 10-K, and our subsequent Quarterly
Reports on Form 10-Q, filed with the Securities and Exchange
Commission (“SEC”), and available at www.investors.bestbuy.com.
(2) A reconciliation of the projected non-GAAP operating income
rate, non-GAAP effective income tax rate, 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; price-fixing settlements; goodwill and intangible asset
impairments; gains and losses on sales of subsidiaries and certain
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. You can identify these
statements by the fact that they use words such as "anticipate,"
“appear,” “approximate,” "assume," "believe," “continue,” “could,”
"estimate," "expect," “foresee,” "guidance," "intend," “may,”
“might,” "outlook," "plan," “possible,” "project" “seek,” “should,”
“would,” and other words and terms of similar meaning or the
negatives thereof. Such statements reflect our current views and
estimates with respect to future market conditions, company
performance and financial results, operational investments,
business prospects, our operating model, new strategies and growth
initiatives, the competitive environment, consumer behavior and
other events. These statements involve a number of judgments and
are subject to certain risks and uncertainties, many of which are
outside the control of the Company, that could cause actual results
to differ materially from the potential results discussed in such
forward-looking statements. Readers should review Item 1A, Risk
Factors, of our most recent Annual Report on Form 10-K, and any
updated information in subsequent Quarterly Reports on Form 10-Q,
for a description of important factors that could cause our actual
results to differ materially from those contemplated by the
forward-looking statements made in this release. Among the factors
that could cause actual results and outcomes to differ materially
from those contained in such forward-looking statements are the
following: macroeconomic pressures in the markets in which we
operate (including but not limited to recession, inflation rates,
fluctuations in foreign currency exchange rates, limitations on a
government’s ability to borrow and/or spend capital, fluctuations
in housing prices, energy markets, jobless rates and effects
related to the conflicts in Eastern Europe and the Middle East or
other geopolitical events); catastrophic events, health crises and
pandemics; susceptibility of the products we sell to technological
advancements, product life cycle fluctuations and changes in
consumer preferences; competition (including from multi-channel
retailers, e-commerce business, technology service providers,
traditional store-based retailers, vendors and mobile network
carriers and in the provision of delivery speed and options); our
ability to attract and retain qualified employees; changes in
market compensation rates; our expansion into health and new
products, services and technologies; our focus on services as a
strategic priority; our reliance on key vendors and mobile network
carriers (including product availability); our ability to maintain
positive brand perception and recognition; our ability to
effectively manage strategic ventures, alliances or acquisitions;
our ability to effectively manage our real estate portfolio;
inability of vendors or service providers to perform components of
our supply chain (impacting our stores or other aspects of our
operations) and other various functions of our business; risks
arising from and potentially unique to our exclusive brands
products; risks associated with vendors that source products
outside the U.S.; our reliance on our information technology
systems, internet and telecommunications access and capabilities;
our ability to prevent or effectively respond to a cyber-attack,
privacy or security breach; product safety and quality concerns;
changes to labor or employment laws or regulations; risks arising
from statutory, regulatory and legal developments (including
statutes and/or regulations related to tax or privacy); evolving
corporate governance and public disclosure regulations and
expectations (including, but not limited to, cybersecurity and
environmental, social and governance matters); risks arising from
our international activities (including fluctuations in foreign
currency exchange rates) and those of our vendors; failure to
effectively manage our costs; our dependence on cash flows and net
earnings generated during the fourth fiscal quarter; pricing
investments and promotional activity; economic or regulatory
developments that might affect our ability to provide attractive
promotional financing; constraints in the capital markets; changes
to our vendor credit terms; changes in our credit ratings; and
failure to meet financial-performance guidance or other
forward-looking statements. We caution that the foregoing list of
important factors is not complete. Any forward-looking statements
speak only as of the date they are made and we assume no obligation
to update any forward-looking statement that we 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
Nine Months Ended
November 2, 2024
October 28, 2023
November 2, 2024
October 28, 2023
Revenue
$
9,445
$
9,756
$
27,580
$
28,806
Cost of sales
7,228
7,524
21,113
22,204
Gross profit
2,217
2,232
6,467
6,602
Gross profit %
23.5
%
22.9
%
23.4
%
22.9
%
Selling, general and administrative
expenses1,871
1,878
5,418
5,605
SG&A %
19.8
%
19.2
%
19.6
%
19.5
%
Restructuring charges
(4
)
-
4
(16
)
Operating income
350
354
1,045
1,013
Operating income %
3.7
%
3.6
%
3.8
%
3.5
%
Other income (expense):
Gain on sale of subsidiary, net
-
-
-
21
Investment income and other
19
8
65
41
Interest expense
(13
)
(14
)
(38
)
(38
)
Earnings before income tax expense and
equity in income of affiliates
356
348
1,072
1,037
Income tax expense
85
86
266
257
Effective tax rate
23.9
%
24.7
%
24.8
%
24.8
%
Equity in income of affiliates
2
1
4
1
Net earnings
$
273
$
263
$
810
$
781
Basic earnings per share
$
1.27
$
1.21
$
3.76
$
3.58
Diluted earnings per share
$
1.26
$
1.21
$
3.73
$
3.57
Weighted-average common shares
outstanding:
Basic
214.8
217.8
215.7
218.4
Diluted
216.7
218.3
217.2
219.1
BEST BUY CO., INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
($ in millions)
(Unaudited and subject to
reclassification)
November 2, 2024
October 28, 2023
Assets
Current assets:
Cash and cash equivalents
$
643
$
636
Receivables, net
932
901
Merchandise inventories
7,806
7,562
Other current assets
574
766
Total current assets
9,955
9,865
Property and equipment, net
2,196
2,313
Operating lease assets
2,842
2,827
Goodwill
1,383
1,383
Other assets
642
494
Total assets
$
17,018
$
16,882
Liabilities and equity
Current liabilities:
Accounts payable
$
7,145
$
7,133
Unredeemed gift card liabilities
246
245
Deferred revenue
878
934
Accrued compensation and related
expenses
361
309
Accrued liabilities
690
760
Current portion of operating lease
liabilities
616
614
Current portion of long-term debt
12
15
Total current liabilities
9,948
10,010
Long-term operating lease liabilities
2,293
2,270
Long-term debt
1,144
1,130
Long-term liabilities
551
660
Equity
3,082
2,812
Total liabilities and equity
$
17,018
$
16,882
BEST BUY CO., INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
($ in millions)
(Unaudited and subject to
reclassification)
Nine Months Ended
November 2, 2024
October 28, 2023
Operating activities
Net earnings
$
810
$
781
Adjustments to reconcile net
earnings to total cash provided by operating activities:
Depreciation and amortization
650
702
Restructuring charges
4
(16
)
Stock-based compensation
108
110
Gain on sale of subsidiary, net
-
(21
)
Other, net
3
7
Changes in operating assets and
liabilities:
Receivables
4
240
Merchandise inventories
(2,869
)
(2,444
)
Other assets
(16
)
(17
)
Accounts payable
2,483
1,468
Income taxes
(219
)
(200
)
Other liabilities
(397
)
(320
)
Total cash provided by operating
activities
561
290
Investing activities
Additions to property and equipment
(528
)
(612
)
Net proceeds from sale of subsidiary
-
14
Other, net
6
(2
)
Total cash used in investing
activities
(522
)
(600
)
Financing activities
Repurchase of common stock
(285
)
(270
)
Dividends paid
(607
)
(603
)
Other, net
-
1
Total cash used in financing
activities
(892
)
(872
)
Effect of exchange rate changes on cash
and cash equivalents
(2
)
(12
)
Decrease in cash, cash equivalents and
restricted cash
(855
)
(1,194
)
Cash, cash equivalents and restricted
cash at beginning of period
1,793
2,253
Cash, cash equivalents and restricted
cash at end of period
$
938
$
1,059
BEST BUY CO., INC.
SEGMENT INFORMATION
($ in millions)
(Unaudited and subject to
reclassification)
Three Months Ended
Nine Months Ended
Domestic Segment Results
November 2, 2024
October 28, 2023
November 2, 2024
October 28, 2023
Revenue
$
8,697
$
8,996
$
25,523
$
26,687
Comparable sales % change
(2.8
)%
(7.3
)%
(3.8
)%
(8.0
)%
Comparable online sales % change
(1.0
)%
(9.3
)%
(2.9
)%
(9.5
)%
Gross profit
$
2,049
$
2,064
$
5,993
$
6,108
Gross profit as a % of revenue
23.6
%
22.9
%
23.5
%
22.9
%
SG&A
$
1,716
$
1,727
$
4,982
$
5,167
SG&A as a % of revenue
19.7
%
19.2
%
19.5
%
19.4
%
Operating income
$
337
$
336
$
1,007
$
955
Operating income as a % of revenue
3.9
%
3.7
%
3.9
%
3.6
%
Domestic Segment Non-GAAP
Results1
Gross profit
$
2,049
$
2,064
$
5,993
$
6,108
Gross profit as a % of revenue
23.6
%
22.9
%
23.5
%
22.9
%
SG&A
$
1,711
$
1,712
$
4,966
$
5,111
SG&A as a % of revenue
19.7
%
19.0
%
19.5
%
19.2
%
Operating income
$
338
$
352
$
1,027
$
997
Operating income as a % of revenue
3.9
%
3.9
%
4.0
%
3.7
%
Three Months Ended
Nine Months Ended
International Segment Results
November 2, 2024
October 28, 2023
November 2, 2024
October 28, 2023
Revenue
$
748
$
760
$
2,057
$
2,119
Comparable sales % change
(3.7
)%
(1.9
)%
(3.0
)%
(4.2
)%
Gross profit
$
168
$
168
$
474
$
494
Gross profit as a % of revenue
22.5
%
22.1
%
23.0
%
23.3
%
SG&A
$
155
$
151
$
436
$
438
SG&A as a % of revenue
20.7
%
19.9
%
21.2
%
20.7
%
Operating income
$
13
$
18
$
38
$
58
Operating income as a % of revenue
1.7
%
2.4
%
1.8
%
2.7
%
International Segment Non-GAAP
Results1
Gross profit
$
168
$
168
$
474
$
494
Gross profit as a % of revenue
22.5
%
22.1
%
23.0
%
23.3
%
SG&A
$
155
$
151
$
436
$
438
SG&A as a % of revenue
20.7
%
19.9
%
21.2
%
20.7
%
Operating income
$
13
$
17
$
38
$
56
Operating income as a % of revenue
1.7
%
2.2
%
1.8
%
2.6
%
(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
November 2, 2024
October 28, 2023
November 2, 2024
October 28, 2023
Computing and Mobile Phones
47
%
44
%
3.8
%
(8.3
)%
Consumer Electronics
28
%
29
%
(5.8
)%
(9.5
)%
Appliances
12
%
14
%
(14.7
)%
(15.1
)%
Entertainment
5
%
6
%
(18.8
)%
20.6
%
Services
7
%
6
%
6.0
%
6.9
%
Other
1
%
1
%
12.9
%
4.7
%
Total
100
%
100
%
(2.8
)%
(7.3
)%
Revenue Mix
Comparable Sales
Three Months Ended
Three Months Ended
International Segment
November 2, 2024
October 28, 2023
November 2, 2024
October 28, 2023
Computing and Mobile Phones
52
%
50
%
(0.1
)%
(1.0
)%
Consumer Electronics
26
%
26
%
(6.1
)%
(8.4
)%
Appliances
9
%
10
%
(8.1
)%
4.0
%
Entertainment
6
%
7
%
(18.7
)%
18.6
%
Services
6
%
6
%
4.0
%
2.4
%
Other
1
%
1
%
(12.7
)%
(37.5
)%
Total
100
%
100
%
(3.7
)%
(1.9
)%
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, goodwill and
intangible asset impairments, price-fixing settlements, gains and
losses on subsidiaries and certain 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
November 2, 2024
October 28, 2023
Domestic
International
Consolidated
Domestic
International
Consolidated
SG&A
$
1,716
$
155
$
1,871
$
1,727
$
151
$
1,878
% of revenue
19.7
%
20.7
%
19.8
%
19.2
%
19.9
%
19.2
%
Intangible asset amortization1
(5
)
-
(5
)
(15
)
-
(15
)
Non-GAAP SG&A
$
1,711
$
155
$
1,866
$
1,712
$
151
$
1,863
% of revenue
19.7
%
20.7
%
19.8
%
19.0
%
19.9
%
19.1
%
Operating income
$
337
$
13
$
350
$
336
$
18
$
354
% of revenue
3.9
%
1.7
%
3.7
%
3.7
%
2.4
%
3.6
%
Intangible asset amortization1
5
-
5
15
-
15
Restructuring charges2
(4
)
-
(4
)
1
(1
)
-
Non-GAAP operating income
$
338
$
13
$
351
$
352
$
17
$
369
% of revenue
3.9
%
1.7
%
3.7
%
3.9
%
2.2
%
3.8
%
Effective tax rate
23.9
%
24.7
%
Intangible asset amortization1
(0.1
)%
-
%
Non-GAAP effective tax rate
23.8
%
24.7
%
Three Months Ended
Three Months Ended
November 2, 2024
October 28, 2023
Pretax Earnings
Net of Tax4
Per Share
Pretax Earnings
Net of Tax4
Per Share
Diluted EPS
$
1.26
$
1.21
Intangible asset amortization1
$
5
$
4
0.01
$
15
$
7
0.03
Restructuring charges2
(4
)
(3
)
(0.01
)
-
2
0.01
Loss on investments
-
-
-
9
9
0.04
Non-GAAP diluted EPS
$
1.26
$
1.29
Nine Months Ended
Nine Months Ended
November 2, 2024
October 28, 2023
Domestic
International
Consolidated
Domestic
International
Consolidated
SG&A
$
4,982
$
436
$
5,418
$
5,167
$
438
$
5,605
% of revenue
19.5
%
21.2
%
19.6
%
19.4
%
20.7
%
19.5
%
Intangible asset amortization1
(16
)
-
(16
)
(56
)
-
(56
)
Non-GAAP SG&A
$
4,966
$
436
$
5,402
$
5,111
$
438
$
5,549
% of revenue
19.5
%
21.2
%
19.6
%
19.2
%
20.7
%
19.3
%
Operating income
$
1,007
$
38
$
1,045
$
955
$
58
$
1,013
% of revenue
3.9
%
1.8
%
3.8
%
3.6
%
2.7
%
3.5
%
Intangible asset amortization1
16
-
16
56
-
56
Restructuring charges2
4
-
4
(14
)
(2
)
(16
)
Non-GAAP operating income
$
1,027
$
38
$
1,065
$
997
$
56
$
1,053
% of revenue
4.0
%
1.8
%
3.9
%
3.7
%
2.6
%
3.7
%
Effective tax rate
24.8
%
24.8
%
Intangible asset amortization1
-
%
0.2
%
Restructuring charges2
-
%
(0.1
)%
Non-GAAP effective tax rate
24.8
%
24.9
%
Nine Months Ended
Nine Months Ended
November 2, 2024
October 28, 2023
Pretax Earnings
Net of Tax4
Per Share
Pretax Earnings
Net of Tax4
Per Share
Diluted EPS
$
3.73
$
3.57
Intangible asset amortization1
$
16
$
12
0.05
$
56
$
43
0.20
Restructuring charges2
4
3
0.02
(16
)
(12
)
(0.06
)
Loss on investments
-
-
-
11
11
0.05
Gain on sale of subsidiary, net3
-
-
-
(21
)
(21
)
(0.10
)
Non-GAAP diluted EPS
$
3.80
$
3.66
(1) Represents the non-cash amortization
of definite-lived intangible assets associated with acquisitions,
including customer relationships, tradenames and developed
technology assets.
(2) Represents charges related to employee
termination benefits and subsequent adjustments from
higher-than-expected employee retention associated with
enterprise-wide restructuring initiatives.
(3) Represents the gain on sale of a
Mexico subsidiary subsequent to our exit from operations in
Mexico.
(4) The non-GAAP adjustments primarily
relate to the U.S. and Mexico. As such, the forecasted annual
income tax charge on a portion of the U.S. non-GAAP adjustments is
calculated using the statutory tax rate of 24.5%. There is no
forecasted annual income tax for Mexico non-GAAP items and a
portion of U.S. non-GAAP items, as there is no forecasted annual
tax benefit/expense on the income/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")
November 2, 20241
October 28, 20231
Net earnings
$
1,270
$
1,276
Total assets
16,042
16,069
ROA
7.9
%
7.9
%
Non-GAAP Return on Investment
("ROI")
November 2, 20241
October 28, 20231
Numerator
Operating income
$
1,606
$
1,610
Add: Non-GAAP operating income
adjustments2
194
147
Add: Operating lease interest3
115
114
Less: Income taxes4
(469
)
(458
)
Add: Depreciation
850
865
Add: Operating lease amortization5
663
666
Adjusted operating income after
tax
$
2,959
$
2,944
Denominator
Total assets
$
16,042
$
16,069
Less: Excess cash6
(403
)
(318
)
Add: Accumulated depreciation and
amortization7
5,237
5,055
Less: Adjusted current liabilities8
(8,395
)
(8,632
)
Average invested operating
assets
$
12,481
$
12,174
Non-GAAP ROI
23.7
%
24.2
%
(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
and intangible asset amortization. Additional details regarding
these adjustments are included in the Reconciliation of Non-GAAP
Financial Measures schedule within the company’s 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/20241125324856/en/
Investor Contact: Mollie O'Brien
mollie.obrien@bestbuy.com Media Contact: Carly Charlson
carly.charlson@bestbuy.com
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