2. Safe Harbor Forward-Looking and Cautionary Statements: This presentation contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 as contained in Section 27A of the U.S. 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,” “estimate,” “expect,” “intend,” “project,” “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: general economic conditions, acquisitions and development of new businesses, divestitures, product availability, sales volumes, pricing actions and promotional activities of competitors, profit margins, weather, changes in law or regulations, foreign currency fluctuation, availability of suitable real estate locations, our ability to react to a disaster recovery situation, and the impact of labor markets and new product introductions on overall profitability. A further list and description of risks, uncertainties and other matters can be found in Best Buy’s annual report and other reports filed from time to time with the U.S. Securities and Exchange Commission, including, but not limited to, Best Buy’s Annual Report on Form 10-K filed with the SEC on 30 April 2008. Management cautions that the foregoing list of important factors is not complete and assumes no obligation to update any forward-looking statement that it may make.
3. Executive Biography Ryan Robinson – Domestic CFO Senior Vice-president Finance and Treasurer Ryan D. Robinson is chief financial officer, United States, senior vice president of finance, and treasurer for Best Buy Co., Inc., a multinational retailer of technology and entertainment products and services. In this capacity, Robinson oversees the planning, performance management and development of Best Buy U.S. operations. Robinson manages the treasury functions for the global enterprise including capital structure, financing and investing needs. He also oversees the financial matters of several of the company’s emerging businesses, including Best Buy Financial Services, Best Buy for Business, Best Buy Mobile, Pacific Sales and Magnolia stand-alone stores. Robinson joined Best Buy in 2002 as vice president of finance and treasurer. Robinson previously led the company’s corporate development activities, including mergers, acquisitions and new business ventures as well as the enterprise tax function. Prior to joining Best Buy, Robinson spent 15 years at ABN AMRO, a leading international bank, most recently serving as senior vice president and director of the company’s North American private equity activities. Robinson also held a number of other management positions in ABN AMRO’s corporate finance, finance advisory, acquisitions and asset securitization divisions. Robinson earned a bachelor’s degree from the University of Notre Dame and a master’s of business administration from the J.L. Kellogg Graduate School of Management at Northwestern University.
4. Agenda Best Buy Background The Retail Growth Model Retail Growth Deep Dive – Evaluating New Stores Q&A
7. A Long History of Strong Growth Source: Company public filings -- in U.S. $ billions -- * Non-GAAP operating income rate. Adjusted to exclude restructuring and goodwill impairment charges taken in FY09. Please see appendix.
8. Best Buy Ranks Among the Largest Retailers in the World Source: Bloomberg. Data is U.S. dollars and represents the trailing 12 months in each companies most recently reported period.
10. How Do Retailers Grow? New Geographies e.g. International Expansion New Offerings e.g. New Products, Services New Distribution Points e.g. New Stores, Concepts, Channels 10
14. In addition to Primary Trade Area of approx. 450,000 people; store will serve young, high income, Urban Trendsetters and Tourists
15. 7th Store in Manhattan bringing Population Per Store to an average of 230,000 Note: Store financials are hypothetical and do not reflect Best Buy’s actual estimates. 11
35. Real Estate Quality e.g. Co-tenancy, Highway Visibility, Convenience Facilities,Investment Decisions are where the strategic “Art” meets financial “Science.” 12
36.
37. Store ramp up a significant driver of 12% Sales CAGR over this period as well as market share gain of 10% 13
41. Financial Valuation Model Economic Value Added (EVA) measures the magnitude of shareholder value created by a project. Theoretically, value is created when EVA greater than 0 NPV of EVA measures the long term value of a project by discounting annual EVA by WACC Internal Rate of Return (IRR) is a measure of the efficiency of capital use NOTvalue creation. It is the discount rate at which NPV is 0 IRR of a value creating project is greater than WACC If Project A has an EVA of $10M and IRR of 16%; and Project B has an EVA of $12M and IRR of 13%. Project B is a better project than Project A
Editor's Notes
Real Estate Investments are approved by a Committee of executives with cross functional representation. The committee members are drawn from: Finance Retail Operations Retail Stores (Field) Real Estate & Market AnalysisAdditional approvals up to the Board of Directors level required at specified cost thresholds. Some of the factors considered by committee include
