MINNEAPOLIS - March 26, 2009 - Best Buy Co., Inc. (NYSE: BBY) has provided the business outlook and guidance range for the fiscal year ending on Feb. 27, 2010.
Jim Muehlbauer, Best Buy's executive vice president of finance and CFO, said, "Fourth-quarter revenue exceeded our expectations on stronger-than-anticipated consumer demand. We continued to gain market share in most of our key categories. While facing liquidation sales of a large competitor, we continued to improve the gross profit rate in our domestic segment. We also responded quickly to the changes in the environment and made significant adjustments to our cost structure and inventory levels. Looking to fiscal 2010, we expect to continue making improvements to our capabilities and cost structure as we prepare for a wide variety of scenarios in consumer demand."
The company's guidance range for the fiscal year ending on Feb. 27, 2010, included the following assumptions:
- Revenue of $46.5 billion to $48.5 billion (which assumes $700 million of pressure due to fluctuations in foreign currency exchange rates), an average increase of 6 percent.
- The opening of approximately 65 net new stores, including approximately 45 new store openings in the domestic segment and approximately 20 net new stores in the international segment.
- A comparable store sales change of 0 percent (flat) to down 5 percent.
- A gross profit rate improvement of 20 to 30 basis points.
- An increase in SG&A dollars of approximately 1 percent, excluding fiscal 2009 acquisitions.
- An effective income tax rate of 38 percent to 38.5 percent.
- Capital expenditures of approximately $700 million, including approximately $100 million of projected capital expenditures in Europe.
- Earnings per diluted share of $2.50 to $2.90, which represents an average decrease of 6 percent versus fiscal 2009's adjusted diluted EPS.
Given the size of its investment in Europe and the complexity of modeling the results of Best Buy Europe, the company also provided benchmarks for this business. The company, in developing its fiscal 2010 guidance range, included an assumption for Best Buy Europe of revenue of approximately $5.3 billion, an operating income rate of 1.4 percent including purchase accounting amortization, and a modestly dilutive earnings impact to the enterprise. The company noted that results from Best Buy Europe, for fiscal 2010 and for the second half of fiscal 2009 as well, were lower than it expected when it initially completed the transaction.
"We expect consumer spending to remain challenging in fiscal 2010, and the complex mix of external factors that will influence their behavior makes forecasting the future increasingly difficult. We will continue to manage the business to maintain flexibility and ensure the health of the company. However, we are also committed to making focused improvements to our model, which we believe will provide a foundation for future growth and superior returns over the long-term," said Muehlbauer.
The CFO added, "Opening fewer new stores this year supports our goal of increasing our free cash flow and is prudent, given the current environment. In the case of Europe, we are delaying our first new store openings due to the opportunity to secure better store locations, at today's lower market prices. It's more important to open them properly than to open them quickly. We currently are anticipating grand opening a small number of U.K. large-format stores and a supporting e-commerce platform in the spring of calendar 2010."
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