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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Best Buy Company | NYSE:BBY | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
2.03 | 2.80% | 74.47 | 74.68 | 73.12 | 73.20 | 2,058,530 | 00:06:57 |
|
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Minnesota
|
|
41-0907483
|
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
|
|
|
7601 Penn Avenue South
|
|
|
Richfield, Minnesota
|
|
55423
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Large accelerated filer
x
|
Accelerated filer
¨
|
Non-accelerated filer
¨
|
|
|
|
|
|
Smaller reporting company
¨
|
Emerging growth company
¨
|
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
Item 1.
|
Financial Statements
|
|
October 28, 2017
|
|
January 28, 2017
|
|
October 29, 2016
|
||||||
Assets
|
|
|
|
|
|
|
|
||||
Current assets
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
$
|
1,103
|
|
|
$
|
2,240
|
|
|
$
|
1,341
|
|
Short-term investments
|
2,237
|
|
|
1,681
|
|
|
1,777
|
|
|||
Receivables, net
|
971
|
|
|
1,347
|
|
|
1,174
|
|
|||
Merchandise inventories
|
6,663
|
|
|
4,864
|
|
|
6,331
|
|
|||
Other current assets
|
431
|
|
|
384
|
|
|
398
|
|
|||
Total current assets
|
11,405
|
|
|
10,516
|
|
|
11,021
|
|
|||
Property and equipment, net
|
2,352
|
|
|
2,293
|
|
|
2,298
|
|
|||
Goodwill
|
425
|
|
|
425
|
|
|
425
|
|
|||
Other assets
|
603
|
|
|
622
|
|
|
798
|
|
|||
Total assets
|
$
|
14,785
|
|
|
$
|
13,856
|
|
|
$
|
14,542
|
|
|
|
|
|
|
|
||||||
Liabilities and equity
|
|
|
|
|
|
||||||
Current liabilities
|
|
|
|
|
|
|
|
|
|||
Accounts payable
|
$
|
6,587
|
|
|
$
|
4,984
|
|
|
$
|
6,233
|
|
Unredeemed gift card liabilities
|
375
|
|
|
427
|
|
|
377
|
|
|||
Deferred revenue
|
426
|
|
|
418
|
|
|
380
|
|
|||
Accrued compensation and related expenses
|
331
|
|
|
358
|
|
|
308
|
|
|||
Accrued liabilities
|
808
|
|
|
865
|
|
|
782
|
|
|||
Accrued income taxes
|
80
|
|
|
26
|
|
|
43
|
|
|||
Current portion of long-term debt
|
545
|
|
|
44
|
|
|
43
|
|
|||
Total current liabilities
|
9,152
|
|
|
7,122
|
|
|
8,166
|
|
|||
Long-term liabilities
|
697
|
|
|
704
|
|
|
791
|
|
|||
Long-term debt
|
784
|
|
|
1,321
|
|
|
1,324
|
|
|||
Equity
|
|
|
|
|
|
|
|
|
|||
Preferred stock, $1.00 par value: Authorized — 400,000 shares; Issued and outstanding — none
|
—
|
|
|
—
|
|
|
—
|
|
|||
Common stock, $0.10 par value: Authorized — 1.0 billion shares; Issued and outstanding — 296,000,000, 311,000,000 and 313,000,000 shares, respectively
|
30
|
|
|
31
|
|
|
31
|
|
|||
Retained earnings
|
3,818
|
|
|
4,399
|
|
|
3,953
|
|
|||
Accumulated other comprehensive income
|
304
|
|
|
279
|
|
|
277
|
|
|||
Total equity
|
4,152
|
|
|
4,709
|
|
|
4,261
|
|
|||
Total liabilities and equity
|
$
|
14,785
|
|
|
$
|
13,856
|
|
|
$
|
14,542
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
October 28, 2017
|
|
October 29, 2016
|
|
October 28, 2017
|
|
October 29, 2016
|
||||||||
Revenue
|
$
|
9,320
|
|
|
$
|
8,945
|
|
|
$
|
26,788
|
|
|
$
|
25,921
|
|
Cost of goods sold
|
7,040
|
|
|
6,742
|
|
|
20,333
|
|
|
19,511
|
|
||||
Gross profit
|
2,280
|
|
|
2,203
|
|
|
6,455
|
|
|
6,410
|
|
||||
Selling, general and administrative expenses
|
1,932
|
|
|
1,890
|
|
|
5,484
|
|
|
5,407
|
|
||||
Restructuring charges
|
(2
|
)
|
|
1
|
|
|
—
|
|
|
30
|
|
||||
Operating income
|
350
|
|
|
312
|
|
|
971
|
|
|
973
|
|
||||
Other income (expense)
|
|
|
|
|
|
|
|
|
|
||||||
Gain on sale of investments
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
||||
Investment income and other
|
12
|
|
|
8
|
|
|
30
|
|
|
22
|
|
||||
Interest expense
|
(20
|
)
|
|
(16
|
)
|
|
(57
|
)
|
|
(54
|
)
|
||||
Earnings from continuing operations before income tax expense
|
342
|
|
|
304
|
|
|
944
|
|
|
943
|
|
||||
Income tax expense
|
104
|
|
|
112
|
|
|
309
|
|
|
343
|
|
||||
Net earnings from continuing operations
|
238
|
|
|
192
|
|
|
635
|
|
|
600
|
|
||||
Gain from discontinued operations (Note 2), net of tax expense of $0, $0, $0 and $7, respectively
|
1
|
|
|
2
|
|
|
1
|
|
|
21
|
|
||||
Net earnings
|
$
|
239
|
|
|
$
|
194
|
|
|
$
|
636
|
|
|
$
|
621
|
|
|
|
|
|
|
|
|
|
||||||||
Basic earnings per share
|
|
|
|
|
|
|
|
|
|
||||||
Continuing operations
|
$
|
0.80
|
|
|
$
|
0.61
|
|
|
$
|
2.09
|
|
|
$
|
1.87
|
|
Discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
0.07
|
|
||||
Basic earnings per share
|
$
|
0.80
|
|
|
$
|
0.61
|
|
|
$
|
2.09
|
|
|
$
|
1.94
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted earnings per share
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
0.78
|
|
|
$
|
0.60
|
|
|
$
|
2.05
|
|
|
$
|
1.85
|
|
Discontinued operations
|
—
|
|
|
0.01
|
|
|
—
|
|
|
0.07
|
|
||||
Diluted earnings per share
|
$
|
0.78
|
|
|
$
|
0.61
|
|
|
$
|
2.05
|
|
|
$
|
1.92
|
|
|
|
|
|
|
|
|
|
||||||||
Dividends declared per common share
|
$
|
0.34
|
|
|
$
|
0.28
|
|
|
$
|
1.02
|
|
|
$
|
1.29
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average common shares outstanding
|
|
|
|
|
|
|
|
|
|
||||||
Basic
|
299.1
|
|
|
316.2
|
|
|
304.1
|
|
|
320.2
|
|
||||
Diluted
|
305.4
|
|
|
320.0
|
|
|
310.6
|
|
|
323.6
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
October 28, 2017
|
|
October 29, 2016
|
|
October 28, 2017
|
|
October 29, 2016
|
||||||||
Net earnings
|
$
|
239
|
|
|
$
|
194
|
|
|
$
|
636
|
|
|
$
|
621
|
|
Foreign currency translation adjustments
|
(17
|
)
|
|
(19
|
)
|
|
25
|
|
|
6
|
|
||||
Comprehensive income
|
$
|
222
|
|
|
$
|
175
|
|
|
$
|
661
|
|
|
$
|
627
|
|
|
Nine Months Ended
|
||||||
|
October 28, 2017
|
|
October 29, 2016
|
||||
Operating activities
|
|
|
|
||||
Net earnings
|
$
|
636
|
|
|
$
|
621
|
|
Adjustments to reconcile net earnings to total cash provided by operating activities:
|
|
|
|
||||
Depreciation
|
500
|
|
|
491
|
|
||
Restructuring charges
|
—
|
|
|
30
|
|
||
Stock-based compensation
|
97
|
|
|
82
|
|
||
Deferred income taxes
|
4
|
|
|
28
|
|
||
Other, net
|
(5
|
)
|
|
(22
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Receivables
|
413
|
|
|
79
|
|
||
Merchandise inventories
|
(1,811
|
)
|
|
(1,369
|
)
|
||
Other assets
|
(36
|
)
|
|
(18
|
)
|
||
Accounts payable
|
1,530
|
|
|
1,801
|
|
||
Other liabilities
|
(187
|
)
|
|
(192
|
)
|
||
Income taxes
|
62
|
|
|
(124
|
)
|
||
Total cash provided by operating activities
|
1,203
|
|
|
1,407
|
|
||
|
|
|
|
||||
Investing activities
|
|
|
|
|
|
||
Additions to property and equipment
|
(489
|
)
|
|
(445
|
)
|
||
Purchases of investments
|
(4,047
|
)
|
|
(2,149
|
)
|
||
Sales of investments
|
3,518
|
|
|
1,685
|
|
||
Proceeds from property disposition
|
2
|
|
|
56
|
|
||
Other, net
|
—
|
|
|
5
|
|
||
Total cash used in investing activities
|
(1,016
|
)
|
|
(848
|
)
|
||
|
|
|
|
||||
Financing activities
|
|
|
|
|
|
||
Repurchase of common stock
|
(1,138
|
)
|
|
(472
|
)
|
||
Repayments of debt
|
(31
|
)
|
|
(384
|
)
|
||
Dividends paid
|
(310
|
)
|
|
(417
|
)
|
||
Issuance of common stock
|
145
|
|
|
66
|
|
||
Other, net
|
(1
|
)
|
|
8
|
|
||
Total cash used in financing activities
|
(1,335
|
)
|
|
(1,199
|
)
|
||
Effect of exchange rate changes on cash
|
15
|
|
|
13
|
|
||
Decrease in cash, cash equivalents and restricted cash
|
(1,133
|
)
|
|
(627
|
)
|
||
Cash, cash equivalents and restricted cash at beginning of period
|
2,433
|
|
|
2,161
|
|
||
Cash, cash equivalents and restricted cash at end of period
|
$
|
1,300
|
|
|
$
|
1,534
|
|
|
Common
Shares
|
|
Common
Stock
|
|
Prepaid Share Repurchase
|
|
Additional
Paid-In
Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Income
|
|
Total
|
|||||||||||||
Balances at January 28, 2017
|
311
|
|
|
$
|
31
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,399
|
|
|
$
|
279
|
|
|
$
|
4,709
|
|
Adoption of ASU 2016-09
|
—
|
|
|
—
|
|
|
—
|
|
|
10
|
|
|
(12
|
)
|
|
—
|
|
|
(2
|
)
|
||||||
Net earnings, nine months ended October 28, 2017
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
636
|
|
|
—
|
|
|
636
|
|
||||||
Other comprehensive income, net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Foreign currency translation adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25
|
|
|
25
|
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
97
|
|
|
—
|
|
|
—
|
|
|
97
|
|
||||||
Restricted stock vested and stock options exercised
|
7
|
|
|
1
|
|
|
—
|
|
|
137
|
|
|
—
|
|
|
—
|
|
|
138
|
|
||||||
Issuance of common stock under employee stock purchase plan
|
—
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
7
|
|
||||||
Common stock dividends, $1.02 per share
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(311
|
)
|
|
—
|
|
|
(311
|
)
|
||||||
Repurchase of common stock
|
(22
|
)
|
|
(2
|
)
|
|
—
|
|
|
(251
|
)
|
|
(894
|
)
|
|
—
|
|
|
(1,147
|
)
|
||||||
Balances at October 28, 2017
|
296
|
|
|
$
|
30
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,818
|
|
|
$
|
304
|
|
|
$
|
4,152
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balances at January 30, 2016
|
324
|
|
|
$
|
32
|
|
|
$
|
(55
|
)
|
|
$
|
—
|
|
|
$
|
4,130
|
|
|
$
|
271
|
|
|
$
|
4,378
|
|
Net earnings, nine months ended October 29, 2016
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
621
|
|
|
—
|
|
|
621
|
|
||||||
Other comprehensive income, net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Foreign currency translation adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
6
|
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
82
|
|
|
—
|
|
|
—
|
|
|
82
|
|
||||||
Restricted stock vested and stock options exercised
|
5
|
|
|
1
|
|
|
—
|
|
|
59
|
|
|
—
|
|
|
—
|
|
|
60
|
|
||||||
Settlement of accelerated share repurchase
|
—
|
|
|
—
|
|
|
55
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
55
|
|
||||||
Issuance of common stock under employee stock purchase plan
|
—
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
7
|
|
||||||
Tax loss from stock options exercised, restricted stock vesting and employee stock purchase plan
|
—
|
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
||||||
Common stock dividends, $1.29 per share
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(417
|
)
|
|
—
|
|
|
(417
|
)
|
||||||
Repurchase of common stock
|
(16
|
)
|
|
(2
|
)
|
|
—
|
|
|
(145
|
)
|
|
(381
|
)
|
|
—
|
|
|
(528
|
)
|
||||||
Balances at October 29, 2016
|
313
|
|
|
$
|
31
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,953
|
|
|
$
|
277
|
|
|
$
|
4,261
|
|
1.
|
Basis of Presentation
|
•
|
Minor changes to the timing of recognition of revenues related to gift cards and loyalty programs;
|
•
|
Changes to certain immaterial revenues that are currently reported on a gross basis, to be reported on a net basis (with no change in timing of recognition) with consequently no impacts to earnings; and
|
•
|
The balance sheet presentation of our sales returns reserve, which will be shown as a separate asset and liability versus the current net presentation.
|
•
|
ASU 2015-11,
Inventory: Simplifying the Measurement of Inventory
. The adoption did not have a material impact on our results of operations, cash flows or financial position.
|
•
|
ASU 2016-09,
Compensation - Stock Compensation: Improvements to Employee Share-Based Payment Accounting
. Excess tax benefits and tax deficiencies are now recognized in our provision for income taxes as a discrete event rather than as a component of stockholders’ equity. In addition, we elected to account for forfeitures as they occur. The cumulative effect of this policy change amounted to
$12 million
, net of tax, and was recorded as a reduction to our retained earnings opening balance. Finally, we elected to present the Condensed Consolidated Statements of Cash Flows on a retrospective transition method, and prior periods have been adjusted to present excess tax benefits as cash flows from operating activities.
|
•
|
ASU 2016-15,
Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments
, and ASU 2016-18,
Statement of Cash Flows: Restricted Cash
. The retrospective adoption increased our beginning and ending cash balance within our statement of cash flows. The adoption had no other material impacts to our cash flow statement and had no impact on our results of operations or financial position.
|
|
October 29, 2016 Reported
|
|
ASU 2016-09 Adjustment
|
|
ASU 2016-15 Adjustment
|
|
ASU 2016-18 Adjustment
|
|
October 29, 2016 Adjusted
|
||||||||||
Operating activities
|
|
|
|
|
|
|
|
|
|
||||||||||
Other, net
|
$
|
(34
|
)
|
|
$
|
12
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(22
|
)
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Receivables
|
80
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
79
|
|
|||||
Merchandise inventories
|
(1,370
|
)
|
|
—
|
|
|
1
|
|
|
—
|
|
|
(1,369
|
)
|
|||||
Total cash provided by operating activities
|
1,395
|
|
|
12
|
|
|
—
|
|
|
—
|
|
|
1,407
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Investing activities
|
|
|
|
|
|
|
|
|
|
||||||||||
Change in restricted assets
|
(8
|
)
|
|
—
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|||||
Total cash used in investing activities
|
(856
|
)
|
|
—
|
|
|
—
|
|
|
8
|
|
|
(848
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Financing activities
|
|
|
|
|
|
|
|
|
|
||||||||||
Other, net
|
20
|
|
|
(12
|
)
|
|
—
|
|
|
—
|
|
|
8
|
|
|||||
Total cash used in financing activities
|
(1,187
|
)
|
|
(12
|
)
|
|
—
|
|
|
—
|
|
|
(1,199
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Decrease in cash, cash equivalents and restricted cash
|
(635
|
)
|
|
—
|
|
|
—
|
|
|
8
|
|
|
(627
|
)
|
|||||
Cash, cash equivalents and restricted cash at beginning of period
|
1,976
|
|
|
—
|
|
|
—
|
|
|
185
|
|
|
2,161
|
|
|||||
Cash, cash equivalents and restricted cash at end of period
|
$
|
1,341
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
193
|
|
|
$
|
1,534
|
|
|
October 28, 2017
|
|
January 28, 2017
|
|
October 29, 2016
|
||||||
Cash and cash equivalents
|
$
|
1,103
|
|
|
$
|
2,240
|
|
|
$
|
1,341
|
|
Restricted cash included in Other current assets
|
197
|
|
|
193
|
|
|
193
|
|
|||
Total cash, cash equivalents and restricted cash
|
$
|
1,300
|
|
|
$
|
2,433
|
|
|
$
|
1,534
|
|
2.
|
Discontinued Operations
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
October 28, 2017
|
|
October 29, 2016
|
|
October 28, 2017
|
|
October 29, 2016
|
||||||||
Gain from discontinued operations before income tax expense
|
$
|
1
|
|
|
$
|
2
|
|
|
$
|
1
|
|
|
$
|
28
|
|
Income tax expense
|
—
|
|
|
—
|
|
|
—
|
|
|
7
|
|
||||
Net gain from discontinued operations
|
$
|
1
|
|
|
$
|
2
|
|
|
$
|
1
|
|
|
$
|
21
|
|
3.
|
Fair Value Measurements
|
•
|
Quoted prices for similar assets or liabilities in active markets;
|
•
|
Quoted prices for identical or similar assets or liabilities in non-active markets;
|
•
|
Inputs other than quoted prices that are observable for the asset or liability; and
|
•
|
Inputs that are derived principally from or corroborated by other observable market data.
|
|
Fair Value Hierarchy
|
|
Fair Value at
|
||||||||||
|
|
October 28, 2017
|
|
January 28, 2017
|
|
October 29, 2016
|
|||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|||
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
|
|||
Money market funds
|
Level 1
|
|
$
|
84
|
|
|
$
|
290
|
|
|
$
|
97
|
|
Time deposits
|
Level 2
|
|
—
|
|
|
15
|
|
|
11
|
|
|||
Short-term investments
|
|
|
|
|
|
|
|
||||||
Commercial paper
|
Level 2
|
|
588
|
|
|
349
|
|
|
250
|
|
|||
Time deposits
|
Level 2
|
|
1,649
|
|
|
1,332
|
|
|
1,527
|
|
|||
Other current assets
|
|
|
|
|
|
|
|
|
|||||
Money market funds
|
Level 1
|
|
8
|
|
|
7
|
|
|
3
|
|
|||
Commercial paper
|
Level 2
|
|
60
|
|
|
60
|
|
|
60
|
|
|||
Foreign currency derivative instruments
|
Level 2
|
|
5
|
|
|
2
|
|
|
5
|
|
|||
Interest rate swap derivative instruments
|
Level 2
|
|
3
|
|
|
—
|
|
|
—
|
|
|||
Time deposits
|
Level 2
|
|
100
|
|
|
100
|
|
|
100
|
|
|||
Other assets
|
|
|
|
|
|
|
|
||||||
Marketable securities that fund deferred compensation
|
Level 1
|
|
98
|
|
|
96
|
|
|
96
|
|
|||
Interest rate swap derivative instruments
|
Level 2
|
|
—
|
|
|
13
|
|
|
13
|
|
|||
|
|
|
|
|
|
|
|
||||||
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|||
Accrued liabilities
|
|
|
|
|
|
|
|
|
|
|
|||
Foreign currency derivative instruments
|
Level 2
|
|
5
|
|
|
3
|
|
|
3
|
|
|||
Long-term liabilities
|
|
|
|
|
|
|
|
||||||
Interest rate swap derivative instruments
|
Level 2
|
|
3
|
|
|
—
|
|
|
—
|
|
|
Impairments
|
|
Remaining Net Carrying Value
(1)
|
||||||||||||||||||||
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
|
||||||||||||||||
|
October 28, 2017
|
|
October 29, 2016
|
|
October 28, 2017
|
|
October 29, 2016
|
|
October 28, 2017
|
|
October 29, 2016
|
||||||||||||
Property and equipment (non-restructuring)
|
$
|
2
|
|
|
$
|
8
|
|
|
$
|
8
|
|
|
$
|
16
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Property and equipment (restructuring)
(2)
|
—
|
|
|
1
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
—
|
|
||||||
Total
|
$
|
2
|
|
|
$
|
9
|
|
|
$
|
8
|
|
|
$
|
24
|
|
|
$
|
—
|
|
|
$
|
—
|
|
(1)
|
Remaining net carrying value approximates fair value. Because assets subject to long-lived asset impairment are not measured at fair value on a recurring basis, certain fair value measurements presented in the table may reflect values at earlier measurement dates and may no longer represent the fair values at
October 28, 2017
, and
October 29, 2016
.
|
(2)
|
See Note 5,
Restructuring Charges
, for additional information.
|
4.
|
Goodwill and Intangible Assets
|
|
October 28, 2017
|
|
January 28, 2017
|
|
October 29, 2016
|
||||||
Goodwill
|
$
|
425
|
|
|
$
|
425
|
|
|
$
|
425
|
|
Intangible assets included in Other assets
|
18
|
|
|
18
|
|
|
18
|
|
|
October 28, 2017
|
|
January 28, 2017
|
|
October 29, 2016
|
||||||||||||||||||
|
Gross Carrying
Amount
|
|
Cumulative
Impairment
|
|
Gross Carrying
Amount
|
|
Cumulative
Impairment
|
|
Gross Carrying
Amount
|
|
Cumulative
Impairment
|
||||||||||||
Goodwill
|
$
|
1,100
|
|
|
$
|
675
|
|
|
$
|
1,100
|
|
|
$
|
675
|
|
|
$
|
1,100
|
|
|
$
|
675
|
|
5.
|
Restructuring Charges
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
October 28, 2017
|
|
October 29, 2016
|
|
October 28, 2017
|
|
October 29, 2016
|
||||||||
Renew Blue Phase 2
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
26
|
|
Canadian brand consolidation
|
(2
|
)
|
|
(2
|
)
|
|
(3
|
)
|
|
(1
|
)
|
||||
Renew Blue
(1)
|
—
|
|
|
1
|
|
|
3
|
|
|
4
|
|
||||
Other restructuring activities
(2)
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||
Total restructuring charges
|
$
|
(2
|
)
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
30
|
|
(1)
|
Represents activity related to our remaining vacant space liability, primarily in our International segment, for our Renew Blue restructuring program, which began in the fourth quarter of fiscal 2013. We may continue to incur immaterial adjustments to the liability for changes in sublease assumptions or potential lease buyouts. In addition, lease payments for vacated stores will continue until leases expire or are terminated. The remaining vacant space liability was
$11 million
at
October 28, 2017
.
|
(2)
|
Represents activity related to our remaining vacant space liability for U.S. large-format store closures in fiscal 2013. We may continue to incur immaterial adjustments to the liability for changes in sublease assumptions or potential lease buyouts. In addition, lease payments for vacated stores will continue until leases expire or are terminated. The remaining vacant space liability was
$7 million
at
October 28, 2017
.
|
|
Domestic
|
||||||||||||||||||
|
Three Months Ended
|
|
Nine Months Ended
|
|
Cumulative Amount
|
||||||||||||||
|
October 28, 2017
|
|
October 29, 2016
|
|
October 28, 2017
|
|
October 29, 2016
|
|
October 28, 2017
|
||||||||||
Property and equipment impairments
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
8
|
|
|
$
|
8
|
|
Termination benefits
|
—
|
|
|
—
|
|
|
—
|
|
|
18
|
|
|
18
|
|
|||||
Total restructuring charges
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
26
|
|
|
$
|
26
|
|
|
Termination
Benefits
|
||
Balances at January 30, 2016
|
$
|
—
|
|
Charges
|
19
|
|
|
Cash payments
|
(16
|
)
|
|
Adjustments
(1)
|
(2
|
)
|
|
Balances at October 29, 2016
|
$
|
1
|
|
(1)
|
Adjustments to termination benefits represent changes in retention assumptions.
|
|
International
|
||||||||||||||||||
|
Three Months Ended
|
|
Nine Months Ended
|
|
Cumulative Amount
|
||||||||||||||
|
October 28, 2017
|
|
October 29, 2016
|
|
October 28, 2017
|
|
October 29, 2016
|
|
October 28, 2017
|
||||||||||
Inventory write-downs
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3
|
|
Property and equipment impairments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
30
|
|
|||||
Tradename impairment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
40
|
|
|||||
Termination benefits
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25
|
|
|||||
Facility closure and other costs
|
(2
|
)
|
|
(2
|
)
|
|
(3
|
)
|
|
(1
|
)
|
|
102
|
|
|||||
Total restructuring charges
|
$
|
(2
|
)
|
|
$
|
(2
|
)
|
|
$
|
(3
|
)
|
|
$
|
(1
|
)
|
|
$
|
200
|
|
|
Termination
Benefits
|
|
Facility
Closure and
Other Costs
|
|
Total
|
||||||
Balances at January 28, 2017
|
$
|
—
|
|
|
$
|
34
|
|
|
$
|
34
|
|
Cash payments
|
—
|
|
|
(14
|
)
|
|
(14
|
)
|
|||
Adjustments
(1)
|
—
|
|
|
(3
|
)
|
|
(3
|
)
|
|||
Changes in foreign currency exchange rates
|
—
|
|
|
1
|
|
|
1
|
|
|||
Balances at October 28, 2017
|
$
|
—
|
|
|
$
|
18
|
|
|
$
|
18
|
|
|
|
|
|
|
|
||||||
Balances at January 30, 2016
|
$
|
2
|
|
|
$
|
64
|
|
|
$
|
66
|
|
Charges
|
—
|
|
|
1
|
|
|
1
|
|
|||
Cash payments
|
(2
|
)
|
|
(29
|
)
|
|
(31
|
)
|
|||
Adjustments
(1)
|
—
|
|
|
(2
|
)
|
|
(2
|
)
|
|||
Changes in foreign currency exchange rates
|
—
|
|
|
3
|
|
|
3
|
|
|||
Balances at October 29, 2016
|
$
|
—
|
|
|
$
|
37
|
|
|
$
|
37
|
|
(1)
|
Adjustments to facility closure and other costs represent changes in sublease assumptions.
|
|
October 28, 2017
|
|
January 28, 2017
|
|
October 29, 2016
|
||||||
2018 Notes
|
$
|
500
|
|
|
$
|
500
|
|
|
$
|
500
|
|
2021 Notes
|
650
|
|
|
650
|
|
|
650
|
|
|||
Interest rate swap valuation adjustments
|
—
|
|
|
13
|
|
|
13
|
|
|||
Subtotal
|
1,150
|
|
|
1,163
|
|
|
1,163
|
|
|||
Debt discounts and issuance costs
|
(3
|
)
|
|
(5
|
)
|
|
(5
|
)
|
|||
Financing lease obligations
|
158
|
|
|
177
|
|
|
180
|
|
|||
Capital lease obligations
|
24
|
|
|
30
|
|
|
29
|
|
|||
Total long-term debt
|
1,329
|
|
|
1,365
|
|
|
1,367
|
|
|||
Less: current portion
|
545
|
|
|
44
|
|
|
43
|
|
|||
Total long-term debt, less current portion
|
$
|
784
|
|
|
$
|
1,321
|
|
|
$
|
1,324
|
|
7.
|
Derivative Instruments
|
|
October 28, 2017
|
|
January 28, 2017
|
|
October 29, 2016
|
||||||||||||||||||
|
Assets
|
|
Liabilities
|
|
Assets
|
|
Liabilities
|
|
Assets
|
|
Liabilities
|
||||||||||||
Derivatives designated as net investment hedges
(1)
|
$
|
3
|
|
|
$
|
5
|
|
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
4
|
|
|
$
|
3
|
|
Derivatives designated as interest rate swaps
(2)
|
3
|
|
|
3
|
|
|
13
|
|
|
—
|
|
|
13
|
|
|
—
|
|
||||||
No hedge designation (foreign exchange forward contracts)
(1)
|
2
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|
—
|
|
||||||
Total
|
$
|
8
|
|
|
$
|
8
|
|
|
$
|
15
|
|
|
$
|
3
|
|
|
$
|
18
|
|
|
$
|
3
|
|
(1)
|
The fair value is recorded in Other current assets or Accrued liabilities.
|
(2)
|
As of
October 28, 2017
, the fair value of the interest rate swaps related to our 2018 Notes is recorded in Other current assets or Accrued liabilities, while the interest rate swaps related to our 2021 Notes is recorded in Other assets or Long-term liabilities. For all previous periods, the fair value is recorded in Other assets or Long-term liabilities.
|
|
October 28, 2017
|
|
January 28, 2017
|
|
October 29, 2016
|
||||||
Derivatives designated as net investment hedges
|
$
|
240
|
|
|
$
|
205
|
|
|
$
|
203
|
|
Derivatives designated as interest rate swaps
|
1,150
|
|
|
750
|
|
|
750
|
|
|||
No hedge designation (foreign exchange forward contracts)
|
64
|
|
|
43
|
|
|
59
|
|
|||
Total
|
$
|
1,454
|
|
|
$
|
998
|
|
|
$
|
1,012
|
|
8.
|
Earnings per Share
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
October 28, 2017
|
|
October 29, 2016
|
|
October 28, 2017
|
|
October 29, 2016
|
||||||||
Numerator
|
|
|
|
|
|
|
|
|
|
||||||
Net earnings from continuing operations
|
$
|
238
|
|
|
$
|
192
|
|
|
$
|
635
|
|
|
$
|
600
|
|
|
|
|
|
|
|
|
|
||||||||
Denominator
|
|
|
|
|
|
|
|
||||||||
Weighted-average common shares outstanding
|
299.1
|
|
|
316.2
|
|
|
304.1
|
|
|
320.2
|
|
||||
Dilutive effect of stock compensation plan awards
|
6.3
|
|
|
3.8
|
|
|
6.5
|
|
|
3.4
|
|
||||
Weighted-average common shares outstanding, assuming dilution
|
305.4
|
|
|
320.0
|
|
|
310.6
|
|
|
323.6
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net earnings per share from continuing operations
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.80
|
|
|
$
|
0.61
|
|
|
$
|
2.09
|
|
|
$
|
1.87
|
|
Diluted
|
$
|
0.78
|
|
|
$
|
0.60
|
|
|
$
|
2.05
|
|
|
$
|
1.85
|
|
9.
|
Comprehensive Income
|
|
Foreign Currency Translation
|
||
Balances at July 29, 2017
|
$
|
321
|
|
Foreign currency translation adjustments
|
(17
|
)
|
|
Balances at October 28, 2017
|
$
|
304
|
|
|
|
||
Balances at January 28, 2017
|
$
|
279
|
|
Foreign currency translation adjustments
|
25
|
|
|
Balances at October 28, 2017
|
$
|
304
|
|
|
|
||
Balances at July 30, 2016
|
$
|
296
|
|
Foreign currency translation adjustments
|
(19
|
)
|
|
Balances at October 29, 2016
|
$
|
277
|
|
|
|
||
Balances at January 30, 2016
|
$
|
271
|
|
Foreign currency translation adjustments
|
6
|
|
|
Balances at October 29, 2016
|
$
|
277
|
|
10.
|
Repurchase of Common Stock
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
October 28, 2017
|
|
October 29, 2016
|
|
October 28, 2017
|
|
October 29, 2016
|
||||||||
Total cost of shares repurchased
|
|
|
|
|
|
|
|
||||||||
Open market
(1)
|
$
|
366
|
|
|
$
|
206
|
|
|
$
|
1,147
|
|
|
$
|
483
|
|
Settlement of January 2016 ASR
(2)
|
—
|
|
|
—
|
|
|
—
|
|
|
45
|
|
||||
Total
|
$
|
366
|
|
|
$
|
206
|
|
|
$
|
1,147
|
|
|
$
|
528
|
|
|
|
|
|
|
|
|
|
||||||||
Average price per share
|
|
|
|
|
|
|
|
||||||||
Open market
|
$
|
57.14
|
|
|
$
|
37.67
|
|
|
$
|
52.35
|
|
|
$
|
33.52
|
|
Settlement of January 2016 ASR
(2)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
28.55
|
|
Average
|
$
|
57.14
|
|
|
$
|
37.67
|
|
|
$
|
52.35
|
|
|
$
|
33.03
|
|
|
|
|
|
|
|
|
|
||||||||
Number of shares repurchased and retired
|
|
|
|
|
|
|
|
||||||||
Open market
(1)
|
6.4
|
|
|
5.5
|
|
|
21.9
|
|
|
14.4
|
|
||||
Settlement of January 2016 ASR
(2)
|
—
|
|
|
—
|
|
|
—
|
|
|
1.6
|
|
||||
Total
|
6.4
|
|
|
5.5
|
|
|
21.9
|
|
|
16.0
|
|
(1)
|
As of
October 28, 2017
,
$17 million
, or
0.3 million
shares, in trades remained unsettled. As of
October 29, 2016
,
$11 million
, or
0.3 million
shares, in trades remained unsettled. The liability for unsettled trades is included in Accrued liabilities in the Condensed Consolidated Balance Sheets.
|
(2)
|
See Note 7,
Shareholders' Equity
, in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended
January 28, 2017
, for additional information regarding the January 2016 ASR.
|
11.
|
Segments
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
October 28, 2017
|
|
October 29, 2016
|
|
October 28, 2017
|
|
October 29, 2016
|
||||||||
Domestic
|
$
|
8,491
|
|
|
$
|
8,192
|
|
|
$
|
24,675
|
|
|
$
|
23,910
|
|
International
|
829
|
|
|
753
|
|
|
2,113
|
|
|
2,011
|
|
||||
Total revenue
|
$
|
9,320
|
|
|
$
|
8,945
|
|
|
$
|
26,788
|
|
|
$
|
25,921
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
October 28, 2017
|
|
October 29, 2016
|
|
October 28, 2017
|
|
October 29, 2016
|
||||||||
Domestic
|
$
|
345
|
|
|
$
|
298
|
|
|
$
|
959
|
|
|
$
|
959
|
|
International
|
5
|
|
|
14
|
|
|
12
|
|
|
14
|
|
||||
Total operating income
|
350
|
|
|
312
|
|
|
971
|
|
|
973
|
|
||||
Other income (expense)
|
|
|
|
|
|
|
|
||||||||
Gain on sale of investments
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
||||
Investment income and other
|
12
|
|
|
8
|
|
|
30
|
|
|
22
|
|
||||
Interest expense
|
(20
|
)
|
|
(16
|
)
|
|
(57
|
)
|
|
(54
|
)
|
||||
Earnings from continuing operations before income tax expense
|
$
|
342
|
|
|
$
|
304
|
|
|
$
|
944
|
|
|
$
|
943
|
|
|
October 28, 2017
|
|
January 28, 2017
|
|
October 29, 2016
|
||||||
Domestic
|
$
|
13,140
|
|
|
$
|
12,496
|
|
|
$
|
13,115
|
|
International
|
1,645
|
|
|
1,360
|
|
|
1,427
|
|
|||
Total assets
|
$
|
14,785
|
|
|
$
|
13,856
|
|
|
$
|
14,542
|
|
12.
|
Contingencies
|
Item 2.
|
Management's Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
Overview
|
•
|
Business Strategy Update
|
•
|
Best Buy 2020: Building the New Blue
|
•
|
Results of Operations
|
•
|
Liquidity and Capital Resources
|
•
|
Off-Balance-Sheet Arrangements and Contractual Obligations
|
•
|
Significant Accounting Policies and Estimates
|
•
|
New Accounting Pronouncements
|
•
|
Safe Harbor Statement Under the Private Securities Litigation Reform Act
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
October 28, 2017
|
|
October 29, 2016
|
|
October 28, 2017
|
|
October 29, 2016
|
||||||||
Revenue
|
$
|
9,320
|
|
|
$
|
8,945
|
|
|
$
|
26,788
|
|
|
$
|
25,921
|
|
Revenue % growth
|
4.2
|
%
|
|
1.4
|
%
|
|
3.3
|
%
|
|
0.1
|
%
|
||||
Comparable sales % gain
(1)
|
4.4
|
%
|
|
1.8
|
%
|
|
3.8
|
%
|
|
0.8
|
%
|
||||
Gross profit
|
$
|
2,280
|
|
|
$
|
2,203
|
|
|
$
|
6,455
|
|
|
$
|
6,410
|
|
Gross profit as a % of revenue
(2)
|
24.5
|
%
|
|
24.6
|
%
|
|
24.1
|
%
|
|
24.7
|
%
|
||||
SG&A
|
$
|
1,932
|
|
|
$
|
1,890
|
|
|
$
|
5,484
|
|
|
$
|
5,407
|
|
SG&A as a % of revenue
(2)
|
20.7
|
%
|
|
21.1
|
%
|
|
20.5
|
%
|
|
20.9
|
%
|
||||
Restructuring charges
|
$
|
(2
|
)
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
30
|
|
Operating income
|
$
|
350
|
|
|
$
|
312
|
|
|
$
|
971
|
|
|
$
|
973
|
|
Operating income as a % of revenue
|
3.8
|
%
|
|
3.5
|
%
|
|
3.6
|
%
|
|
3.8
|
%
|
||||
Net earnings from continuing operations
|
$
|
238
|
|
|
$
|
192
|
|
|
$
|
635
|
|
|
$
|
600
|
|
Earnings from discontinued operations, net of tax
|
$
|
1
|
|
|
$
|
2
|
|
|
$
|
1
|
|
|
$
|
21
|
|
Net earnings
|
$
|
239
|
|
|
$
|
194
|
|
|
$
|
636
|
|
|
$
|
621
|
|
Diluted earnings per share from continuing operations
|
$
|
0.78
|
|
|
$
|
0.60
|
|
|
$
|
2.05
|
|
|
$
|
1.85
|
|
Diluted earnings per share
|
$
|
0.78
|
|
|
$
|
0.61
|
|
|
$
|
2.05
|
|
|
$
|
1.92
|
|
(1)
|
Due to the Canadian brand consolidation impact on our International segment comparable sales metric, Consolidated comparable sales for the three and nine months ended October 29, 2016, equal the Domestic segment comparable sales. Refer to the
Overview
section within this Item 2. MD&A for more information.
|
(2)
|
Because retailers vary in how they record costs of operating their supply chain between cost of goods sold and SG&A, our gross profit rate and SG&A rate may not be comparable to other retailers’ corresponding rates. For additional information regarding costs classified in cost of goods sold and SG&A, refer to Note 1,
Summary of Significant Accounting Policies
, in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended
January 28, 2017
.
|
|
Three Months Ended
|
|
Nine Months Ended
|
||
|
October 28, 2017
|
|
October 28, 2017
|
||
Comparable sales impact
|
4.2
|
%
|
|
3.7
|
%
|
Non-comparable sales impact
(1)
|
(0.4
|
)%
|
|
(0.5
|
)%
|
Foreign currency exchange rate fluctuation impact
|
0.4
|
%
|
|
0.1
|
%
|
Total revenue increase
|
4.2
|
%
|
|
3.3
|
%
|
(1)
|
Non-comparable sales reflects the impact of net store opening and closing activity, as well as the impact of revenue streams not included within our comparable sales calculation, such as profit sharing benefits, certain credit card revenue, gift card breakage, commercial sales and sales of merchandise to wholesalers and dealers, as applicable.
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
October 28, 2017
|
|
October 29, 2016
|
|
October 28, 2017
|
|
October 29, 2016
|
||||||||
Revenue
|
$
|
8,491
|
|
|
$
|
8,192
|
|
|
$
|
24,675
|
|
|
$
|
23,910
|
|
Revenue % growth
|
3.6
|
%
|
|
1.3
|
%
|
|
3.2
|
%
|
|
0.2
|
%
|
||||
Comparable sales % gain
(1)
|
4.5
|
%
|
|
1.8
|
%
|
|
3.8
|
%
|
|
0.8
|
%
|
||||
Gross profit
|
$
|
2,096
|
|
|
$
|
2,020
|
|
|
$
|
5,952
|
|
|
$
|
5,901
|
|
Gross profit as a % of revenue
|
24.7
|
%
|
|
24.7
|
%
|
|
24.1
|
%
|
|
24.7
|
%
|
||||
SG&A
|
$
|
1,751
|
|
|
$
|
1,720
|
|
|
$
|
4,993
|
|
|
$
|
4,915
|
|
SG&A as a % of revenue
|
20.6
|
%
|
|
21.0
|
%
|
|
20.2
|
%
|
|
20.6
|
%
|
||||
Restructuring charges
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
27
|
|
Operating income
|
$
|
345
|
|
|
$
|
298
|
|
|
$
|
959
|
|
|
$
|
959
|
|
Operating income as a % of revenue
|
4.1
|
%
|
|
3.6
|
%
|
|
3.9
|
%
|
|
4.0
|
%
|
||||
|
|
|
|
|
|
|
|
||||||||
Selected Online Revenue Data
|
|
|
|
|
|
|
|
||||||||
Total online revenue
|
$
|
1,077
|
|
|
$
|
881
|
|
|
$
|
3,191
|
|
|
$
|
2,548
|
|
Online revenue as a % of total segment revenue
|
12.7
|
%
|
|
10.8
|
%
|
|
12.9
|
%
|
|
10.7
|
%
|
||||
Comparable online sales % gain
(1)
|
22.3
|
%
|
|
24.1
|
%
|
|
25.3
|
%
|
|
23.9
|
%
|
(1)
|
Comparable online sales is included in the comparable sales calculation.
|
|
Three Months Ended
|
|
Nine Months Ended
|
||
|
October 28, 2017
|
|
October 28, 2017
|
||
Comparable sales impact
|
4.3
|
%
|
|
3.6
|
%
|
Non-comparable sales impact
(1)
|
(0.7
|
)%
|
|
(0.4
|
)%
|
Total revenue increase
|
3.6
|
%
|
|
3.2
|
%
|
(1)
|
Non-comparable sales reflects the impact of net store opening and closing activity, as well as the impact of revenue streams not included within our comparable sales calculation, such as profit sharing benefits, certain credit card revenue, gift card breakage, commercial sales and sales of merchandise to wholesalers and dealers, as applicable.
|
|
2018
|
|
2017
|
||||||||||||||||||||
|
Total Stores at Beginning of Third Quarter
|
|
Stores Opened
|
|
Stores Closed
|
|
Total Stores at End of Third Quarter
|
|
Total Stores at Beginning of Third Quarter
|
|
Stores Opened
|
|
Stores Closed
|
|
Total Stores at End of Third Quarter
|
||||||||
Best Buy
|
1,024
|
|
|
—
|
|
|
(16
|
)
|
|
1,008
|
|
|
1,035
|
|
|
—
|
|
|
(9
|
)
|
|
1,026
|
|
Best Buy Mobile
|
292
|
|
|
—
|
|
|
(5
|
)
|
|
287
|
|
|
334
|
|
|
—
|
|
|
(3
|
)
|
|
331
|
|
Pacific Sales
|
28
|
|
|
—
|
|
|
—
|
|
|
28
|
|
|
28
|
|
|
—
|
|
|
—
|
|
|
28
|
|
Total Domestic segment stores
|
1,344
|
|
|
—
|
|
|
(21
|
)
|
|
1,323
|
|
|
1,397
|
|
|
—
|
|
|
(12
|
)
|
|
1,385
|
|
|
Revenue Mix
|
|
Comparable Sales
|
||||||||
|
Three Months Ended
|
|
Three Months Ended
|
||||||||
|
October 28, 2017
|
|
October 29, 2016
|
|
October 28, 2017
|
|
October 29, 2016
|
||||
Consumer Electronics
|
31
|
%
|
|
31
|
%
|
|
3.5
|
%
|
|
4.9
|
%
|
Computing and Mobile Phones
|
48
|
%
|
|
49
|
%
|
|
3.5
|
%
|
|
1.6
|
%
|
Entertainment
|
6
|
%
|
|
6
|
%
|
|
4.1
|
%
|
|
(9.4
|
)%
|
Appliances
|
10
|
%
|
|
9
|
%
|
|
13.5
|
%
|
|
3.0
|
%
|
Services
|
5
|
%
|
|
5
|
%
|
|
3.2
|
%
|
|
(1.8
|
)%
|
Other
|
—
|
%
|
|
—
|
%
|
|
n/a
|
|
|
n/a
|
|
Total
|
100
|
%
|
|
100
|
%
|
|
4.5
|
%
|
|
1.8
|
%
|
•
|
Consumer Electronics:
Comparable sales gain was driven primarily by smart home, home theater and portable audio, partially offset by declines in digital imaging and health & fitness products.
|
•
|
Computing and Mobile Phones:
Comparable sales gain was driven primarily by computing, wearables and mobile phones.
|
•
|
Entertainment:
Comparable sales gain was driven primarily by gaming hardware and drones.
|
•
|
Appliances:
Comparable sales gain was driven primarily by large and small appliances.
|
•
|
Services:
Comparable sales gain was driven primarily by continued growth in our warranty business and higher installation and delivery services.
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
October 28, 2017
|
|
October 29, 2016
|
|
October 28, 2017
|
|
October 29, 2016
|
||||||||
Revenue
|
$
|
829
|
|
|
$
|
753
|
|
|
$
|
2,113
|
|
|
$
|
2,011
|
|
Revenue % growth (decline)
|
10.1
|
%
|
|
3.3
|
%
|
|
5.1
|
%
|
|
(1.8
|
)%
|
||||
Comparable sales % gain
(1)
|
3.8
|
%
|
|
n/a
|
|
|
4.2
|
%
|
|
n/a
|
|
||||
Gross profit
|
$
|
184
|
|
|
$
|
183
|
|
|
$
|
503
|
|
|
$
|
509
|
|
Gross profit as a % of revenue
|
22.2
|
%
|
|
24.3
|
%
|
|
23.8
|
%
|
|
25.3
|
%
|
||||
SG&A
|
$
|
181
|
|
|
$
|
170
|
|
|
$
|
491
|
|
|
$
|
492
|
|
SG&A as a % of revenue
|
21.8
|
%
|
|
22.6
|
%
|
|
23.2
|
%
|
|
24.5
|
%
|
||||
Restructuring charges
|
$
|
(2
|
)
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
3
|
|
Operating income
|
$
|
5
|
|
|
$
|
14
|
|
|
$
|
12
|
|
|
$
|
14
|
|
Operating income as a % of revenue
|
0.6
|
%
|
|
1.9
|
%
|
|
0.6
|
%
|
|
0.7
|
%
|
(1)
|
Due to the Canadian brand consolidation impact on our International segment comparable sales metric, we did not report an International segment comparable sales metric for the
three
or
nine
months ended
October 29, 2016
. Refer to the
Overview
section within this Item 2. MD&A for more information.
|
|
Three Months Ended
|
|
Nine Months Ended
|
||
|
October 28, 2017
|
|
October 28, 2017
|
||
Comparable sales impact
|
3.7
|
%
|
|
4.0
|
%
|
Non-comparable sales impact
(1)
|
1.1
|
%
|
|
0.3
|
%
|
Foreign currency exchange rate fluctuation impact
|
5.3
|
%
|
|
0.8
|
%
|
Total revenue increase
|
10.1
|
%
|
|
5.1
|
%
|
(1)
|
Non-comparable sales reflects the impact of net store opening and closing activity, including the Canadian brand consolidation activity, as well as the impact of revenue streams not included within our comparable sales calculation, such as profit sharing benefits, certain credit card revenue, gift card breakage, commercial sales and sales of merchandise to wholesalers and dealers.
|
|
2018
|
|
2017
|
||||||||||||||||||||
|
Total Stores at Beginning of Third Quarter
|
|
Stores Opened
|
|
Stores Closed
|
|
Total Stores at End of Third Quarter
|
|
Total Stores at Beginning of Third Quarter
|
|
Stores Opened
|
|
Stores Closed
|
|
Total Stores at End of Third Quarter
|
||||||||
Canada
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Best Buy
|
134
|
|
|
—
|
|
|
—
|
|
|
134
|
|
|
135
|
|
|
—
|
|
|
—
|
|
|
135
|
|
Best Buy Mobile
|
53
|
|
|
—
|
|
|
(1
|
)
|
|
52
|
|
|
54
|
|
|
—
|
|
|
(1
|
)
|
|
53
|
|
Mexico
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Best Buy
|
22
|
|
|
1
|
|
|
—
|
|
|
23
|
|
|
18
|
|
|
—
|
|
|
—
|
|
|
18
|
|
Best Buy Express
|
5
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
6
|
|
|
—
|
|
|
(1
|
)
|
|
5
|
|
Total International segment stores
|
214
|
|
|
1
|
|
|
(1
|
)
|
|
214
|
|
|
213
|
|
|
—
|
|
|
(2
|
)
|
|
211
|
|
|
Revenue Mix
|
|
Comparable Sales
|
|||||||
|
Three Months Ended
|
|
Three Months Ended
|
|||||||
|
October 28, 2017
|
|
October 29, 2016
|
|
October 28, 2017
|
|
October 29, 2016
(1)
|
|||
Consumer Electronics
|
27
|
%
|
|
28
|
%
|
|
4.5
|
%
|
|
n/a
|
Computing and Mobile Phones
|
52
|
%
|
|
54
|
%
|
|
0.6
|
%
|
|
n/a
|
Entertainment
|
6
|
%
|
|
6
|
%
|
|
7.8
|
%
|
|
n/a
|
Appliances
|
8
|
%
|
|
5
|
%
|
|
49.0
|
%
|
|
n/a
|
Services
|
5
|
%
|
|
6
|
%
|
|
(15.1
|
)%
|
|
n/a
|
Other
|
2
|
%
|
|
1
|
%
|
|
n/a
|
|
|
n/a
|
Total
|
100
|
%
|
|
100
|
%
|
|
3.8
|
%
|
|
n/a
|
(1)
|
Due to the Canadian brand consolidation impact on our International segment comparable sales metric, we did not report an International segment comparable sales metric for the three months ended
October 29, 2016
. Refer to the Overview section within this Item 2. MD&A for more information.
|
•
|
Consumer Electronics:
Comparable sales gain was driven primarily by smart home and portable audio, partially offset by declines in digital imaging.
|
•
|
Computing and Mobile Phones:
Comparable sales gain was driven primarily by computing and wearables, partially offset by declines in tablets.
|
•
|
Entertainment:
Comparable sales gain was driven primarily by gaming hardware and drones.
|
•
|
Appliances:
Comparable sales gain was driven primarily by large and small appliances.
|
•
|
Services:
Comparable sales decline was driven primarily by technical support, partially offset by gains in installation.
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
October 28, 2017
|
|
October 29, 2016
(1)
|
|
October 28, 2017
|
|
October 29, 2016
(1)
|
||||||||
Operating income
|
$
|
350
|
|
|
$
|
312
|
|
|
$
|
971
|
|
|
$
|
973
|
|
Net CRT/LCD settlements
(2)
|
—
|
|
|
—
|
|
|
—
|
|
|
(161
|
)
|
||||
Other Canadian brand consolidation charges - SG&A
(3)
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||
Restructuring charges
(4)
|
(2
|
)
|
|
1
|
|
|
—
|
|
|
30
|
|
||||
Non-GAAP operating income
|
$
|
348
|
|
|
$
|
313
|
|
|
$
|
971
|
|
|
$
|
843
|
|
|
|
|
|
|
|
|
|
||||||||
Income tax expense
|
$
|
104
|
|
|
$
|
112
|
|
|
$
|
309
|
|
|
$
|
343
|
|
Effective tax rate
|
30.4
|
%
|
|
36.7
|
%
|
|
32.7
|
%
|
|
36.4
|
%
|
||||
Income tax impact of non-GAAP adjustments
(5)
|
—
|
|
|
—
|
|
|
2
|
|
|
(49
|
)
|
||||
Non-GAAP income tax expense
|
$
|
104
|
|
|
$
|
112
|
|
|
$
|
311
|
|
|
$
|
294
|
|
Non-GAAP effective tax rate
|
30.4
|
%
|
|
36.6
|
%
|
|
32.8
|
%
|
|
36.3
|
%
|
||||
|
|
|
|
|
|
|
|
||||||||
Net earnings from continuing operations
|
$
|
238
|
|
|
$
|
192
|
|
|
$
|
635
|
|
|
$
|
600
|
|
Net CRT/LCD settlements
(2)
|
—
|
|
|
—
|
|
|
—
|
|
|
(161
|
)
|
||||
Other Canadian brand consolidation charges - SG&A
(3)
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||
Restructuring charges
(4)
|
(2
|
)
|
|
1
|
|
|
—
|
|
|
30
|
|
||||
(Gain) loss on investments, net
(6)
|
1
|
|
|
—
|
|
|
6
|
|
|
(2
|
)
|
||||
Income tax impact of non-GAAP adjustments
(5)
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
49
|
|
||||
Non-GAAP net earnings from continuing operations
|
$
|
237
|
|
|
$
|
193
|
|
|
$
|
639
|
|
|
$
|
517
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted EPS from continuing operations
|
$
|
0.78
|
|
|
$
|
0.60
|
|
|
$
|
2.05
|
|
|
$
|
1.85
|
|
Per share impact of net CRT/LCD settlements
(2)
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.50
|
)
|
||||
Per share impact of other Canadian brand consolidation charges - SG&A
(3)
|
—
|
|
|
—
|
|
|
—
|
|
|
0.01
|
|
||||
Per share impact of restructuring charges
(4)
|
—
|
|
|
—
|
|
|
—
|
|
|
0.09
|
|
||||
Per share impact of (gain) loss on investments, net
(6)
|
—
|
|
|
—
|
|
|
0.02
|
|
|
(0.01
|
)
|
||||
Per share income tax impact of non-GAAP adjustments
(5)
|
—
|
|
|
—
|
|
|
(0.01
|
)
|
|
0.16
|
|
||||
Non-GAAP diluted EPS from continuing operations
|
$
|
0.78
|
|
|
$
|
0.60
|
|
|
$
|
2.06
|
|
|
$
|
1.60
|
|
(1)
|
Beginning in the first quarter of fiscal 2018, we no longer exclude non-restructuring property and equipment impairment charges from our non-GAAP financial measures. To ensure our financial results are comparable, we have recast the prior period balance to conform to this presentation. Refer to the
Overview
section within this MD&A for more information.
|
(2)
|
Represents CRT and LCD litigation settlements reached, net of related legal fees and costs. Settlements related to products purchased and sold in prior fiscal years. For the
nine
months ended
October 29, 2016
, the entire balance related to the United States. Refer to Note 12,
Contingencies and Commitments
, within the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended
January 28, 2017
, for further information.
|
(3)
|
Represents charges related to the Canadian brand consolidation initiated in the first quarter of fiscal 2016, primarily due to retention bonuses and other store-related costs that were a direct result of the consolidation but did not qualify as restructuring charges.
|
(4)
|
Refer to Note 5,
Restructuring Charges
, in the Notes to Condensed Consolidated Financial Statements for additional information regarding the nature of these charges. For the
three
months ended
October 28, 2017
, the entire balance related to Canada. For the
three
months ended
October 29, 2016
, a charge of
$2 million
related to the United States and a benefit of
$1 million
related to Canada. For the
nine
months ended
October 29, 2016
,
$27 million
related to the United States and
$3 million
related to Canada.
|
(5)
|
Income tax impact of non-GAAP adjustments is the summation of the calculated income tax charge related to each non-GAAP non-income tax adjustment. The non-GAAP adjustments relate primarily to adjustments in the United States and Canada. As such, the income tax charge is calculated using the statutory tax rates of
38.0%
for the United States and
26.6%
for Canada, applied to the non-GAAP adjustments of each country.
|
(6)
|
Represents Gain on sale of investments and investment impairments included in Investment income and other within the Condensed Consolidated Statement of Earnings.
|
|
October 28, 2017
|
|
January 28, 2017
|
|
October 29, 2016
|
||||||
Cash and cash equivalents
|
$
|
1,103
|
|
|
$
|
2,240
|
|
|
$
|
1,341
|
|
Short-term investments
|
2,237
|
|
|
1,681
|
|
|
1,777
|
|
|||
Total cash, cash equivalents and short-term investments
|
$
|
3,340
|
|
|
$
|
3,921
|
|
|
$
|
3,118
|
|
|
Nine Months Ended
|
||||||
|
October 28, 2017
|
|
October 29, 2016
(1)
|
||||
Total cash provided by (used in):
|
|
|
|
||||
Operating activities
|
$
|
1,203
|
|
|
$
|
1,407
|
|
Investing activities
|
(1,016
|
)
|
|
(848
|
)
|
||
Financing activities
|
(1,335
|
)
|
|
(1,199
|
)
|
||
Effect of exchange rate changes on cash
|
15
|
|
|
13
|
|
||
Decrease in cash, cash equivalents and restricted cash
|
$
|
(1,133
|
)
|
|
$
|
(627
|
)
|
(1)
|
Represents cash flows as of
October 29, 2016
, recast to present our retrospective adoption of accounting guidance related to the presentation of the cash flow statement. Refer to Note 1,
Basis of Presentation
, of the Notes to Condensed Consolidated Financial Statements
of this Quarterly Report on Form 10-Q
.
|
Rating Agency
|
|
Rating
|
|
Outlook
|
Standard & Poor's
|
|
BBB-
|
|
Positive
|
Moody's
|
|
Baa1
|
|
Stable
|
Fitch
|
|
BBB-
|
|
Positive
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
October 28, 2017
|
|
October 29, 2016
|
|
October 28, 2017
|
|
October 29, 2016
(1)
|
||||||||
Total cost of shares repurchased
|
$
|
366
|
|
|
$
|
206
|
|
|
$
|
1,147
|
|
|
$
|
528
|
|
Average price per share
|
$
|
57.14
|
|
|
$
|
37.67
|
|
|
$
|
52.35
|
|
|
$
|
33.03
|
|
Number of shares repurchased and retired
|
6.4
|
|
|
5.5
|
|
|
21.9
|
|
|
16.0
|
|
(1)
|
Includes the settlement of an accelerated share repurchase contract. Refer to Note 7,
Shareholders' Equity
, in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended
January 28, 2017
, for further information on this contract.
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
October 28, 2017
|
|
October 29, 2016
|
|
October 28, 2017
|
|
October 29, 2016
|
||||||||
Regular quarterly cash dividends per share
|
$
|
0.34
|
|
|
$
|
0.28
|
|
|
$
|
1.02
|
|
|
$
|
0.84
|
|
Special cash dividends per share
(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
0.45
|
|
||||
Total cash dividends per share
|
$
|
0.34
|
|
|
$
|
0.28
|
|
|
$
|
1.02
|
|
|
$
|
1.29
|
|
|
|
|
|
|
|
|
|
||||||||
Cash dividends declared and paid
|
$
|
102
|
|
|
$
|
89
|
|
|
$
|
310
|
|
|
$
|
417
|
|
(1)
|
Special cash dividends are authorized by our Board and issued upon their discretion. Dividends paid in fiscal
2017
related to the net after-tax proceeds from certain legal settlements and asset disposals.
|
Non-GAAP debt to EBITDAR =
|
Non-GAAP debt
|
|
Non-GAAP EBITDAR
|
|
|
October 28, 2017
(1)
|
|
January 28, 2017
(1)
|
|
October 29, 2016
(1)
|
||||||
Debt (including current portion)
|
$
|
1,329
|
|
|
$
|
1,365
|
|
|
$
|
1,367
|
|
Capitalized operating lease obligations (5 times rental expense)
(2)
|
3,910
|
|
|
3,872
|
|
|
3,834
|
|
|||
Non-GAAP debt
|
$
|
5,239
|
|
|
$
|
5,237
|
|
|
$
|
5,201
|
|
|
|
|
|
|
|
||||||
Net earnings from continuing operations
|
$
|
1,242
|
|
|
$
|
1,207
|
|
|
$
|
1,077
|
|
Other income (expense) (including interest expense, net)
|
35
|
|
|
38
|
|
|
51
|
|
|||
Income tax expense
|
575
|
|
|
609
|
|
|
616
|
|
|||
Depreciation and amortization expense
|
663
|
|
|
654
|
|
|
654
|
|
|||
Rental expense
|
782
|
|
|
774
|
|
|
767
|
|
|||
Restructuring charges
(3)
|
9
|
|
|
39
|
|
|
42
|
|
|||
Non-GAAP EBITDAR
|
$
|
3,306
|
|
|
$
|
3,321
|
|
|
$
|
3,207
|
|
|
|
|
|
|
|
||||||
Debt to net earnings ratio
|
1.1
|
|
|
1.1
|
|
|
1.3
|
|
|||
Non-GAAP debt to EBITDAR ratio
|
1.6
|
|
|
1.6
|
|
|
1.6
|
|
(1)
|
Debt is reflected as of the balance sheet dates for each of the respective fiscal periods, while net earnings from continuing operations and the other components of non-GAAP EBITDAR represent activity for the 12-months ended as of each of the respective dates.
|
(2)
|
The multiple of five times annual rent expense in the calculation of our capitalized operating lease obligations is the multiple used for the retail sector by one of the nationally recognized credit rating agencies that rate our creditworthiness, and we consider it to be an appropriate multiple for our lease portfolio.
|
(3)
|
Refer to Note 5,
Restructuring Charges
, in the Notes to Condensed Consolidated Financial Statements for additional information regarding the nature of these charges. Previously, we also added back non-restructuring property and equipment impairment charges to our non-GAAP EBITDAR. However, beginning in the first quarter of fiscal 2018, we no longer exclude non-restructuring property and equipment impairment charges from our non-GAAP financial measures. To ensure our financial results are comparable, we have recast the prior period balances to conform to this presentation. Refer to the
Overview
section within this Item 2. MD&A for more information.
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 4.
|
Controls and Procedures
|
Item 1.
|
Legal Proceedings
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
Fiscal Period
|
|
Total Number of Shares Purchased
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Program
(1)
|
|
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program
(1)
|
||||||
July 30, 2017 through August 26, 2017
|
|
1,891,131
|
|
|
$
|
60.50
|
|
|
1,891,131
|
|
|
$
|
4,143,000,000
|
|
August 27, 2017 through September 30, 2017
|
|
1,831,093
|
|
|
$
|
55.16
|
|
|
1,831,093
|
|
|
$
|
4,042,000,000
|
|
October 1, 2017 through October 28, 2017
|
|
2,680,203
|
|
|
$
|
56.13
|
|
|
2,680,203
|
|
|
$
|
3,891,000,000
|
|
Total
|
|
6,402,427
|
|
|
$
|
57.14
|
|
|
6,402,427
|
|
|
|
(1)
|
Pursuant to a
$5.0 billion
share repurchase program that was authorized by our Board in February 2017. There is no expiration date governing the period over which we can repurchase shares under the February 2017 share repurchase program. For additional information see Note 10,
Repurchase of Common Stock
, Notes to Condensed Consolidated Financial Statements, included in this Quarterly Report on Form 10-Q.
|
Item 6.
|
Exhibits
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
101
|
|
The following financial information from our Quarterly Report on Form 10-Q for the third quarter of fiscal 2018, filed with the SEC on December 1, 2017, formatted in Extensible Business Reporting Language (XBRL): (i) the Condensed Consolidated Balance Sheets at October 28, 2017, January 28, 2017, and October 29, 2016, (ii) the Condensed Consolidated Statements of Earnings for the three and nine months ended October 28, 2017, and October 29, 2016, (iii) the Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended October 28, 2017, and October 29, 2016, (iv) the Condensed Consolidated Statements of Cash Flows for the nine months ended October 28, 2017, and October 29, 2016, (v) the Condensed Consolidated Statements of Changes in Shareholders’ Equity for the nine months ended October 28, 2017, and October 29, 2016, and (vi) the Notes to Condensed Consolidated Financial Statements.
|
(1)
|
The certifications in Exhibit 32.1 and Exhibit 32.2 to this Quarterly Report on Form 10-Q shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability of that section and shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document.
|
|
BEST BUY CO., INC.
|
|
|
(Registrant)
|
|
|
|
|
Date: December 1, 2017
|
By:
|
/s/ HUBERT JOLY
|
|
|
Hubert Joly
|
|
|
Chairman and Chief Executive Officer
|
|
|
|
Date: December 1, 2017
|
By:
|
/s/ CORIE BARRY
|
|
|
Corie Barry
|
|
|
Chief Financial Officer
|
|
|
|
Date: December 1, 2017
|
By:
|
/s/ MATHEW R. WATSON
|
|
|
Mathew R. Watson
|
|
|
Senior Vice President, Finance – Controller and Chief Accounting Officer
|
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