2. Safe Harbor Statement
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, the company’s ability to react to a disaster recovery situation, the impact of labor
markets and new product introductions on overall profitability, failure to achieve anticipated
benefits of announced transactions and integration challenges relating to new ventures. A further
list and description of these risks, uncertainties and other matters can be found in Best Buy’s
annual report and other filings made 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 April 28, 2010. 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.
2
3. Store Counts
BEST BUY
U.S. 1,091
Turkey 2
Mexico 5
UK 3
China 8
Canada 70
GEEK SQUAD
Stand-Alone Stores 5
BEST BUY MOBILE
Stand-Alone Stores U.S. 109
Stand-Alone Stores Canada 6
FAMILY OF BRANDS
The Carphone Warehouse 2,436
Five Star 159
Future Shop 145
Magnolia Audio Video 6
Pacific Sales 35
3
5. Margin Expansion
Domestic Gross Margins
have been bolstered by
strong rate improvements
as well as enhanced mix
given the strong growth of
BBY Mobile, leading to a H1
YOY GM rate increase of
110bps.
Gross Margin strength has
driven strong enterprise
level Operating Income rate
performance.
5
7. How Does Best Buy Make Money in the Connected World?
Accessories
Content
Services
Connections
Hardware
=
7
8. Connections – High level business model
1B+ annual traffic to
stores & BBY.com
Blue shirt expertise
and assistance
Millions in unit sales of
connectable hardware
Significant opportunity to
connect customers to
necessary video, voice, &
broadband solutions.
Ongoing payment:
BBY receives a portion of recurring monthly revenue
paid to carriers or entire monthly revenue paid
directly to BBY (e.g. BBY Connect)
Bounty Model (majority):
Portion of expected lifetime value of customer
is shared with BBY via an upfront bounty
Through helping customers solve their Connected World needs, Best Buy is positioned as an extremely valuable
customer acquisition engine for carrier partners
Resulting in
economics shared
with BBY
8
9. Connections – Examples
New Customer
or Upgrade
Wireless
Broadband
Mobile Phone
Contracts
Faster Home
Connection
9
12. Holiday Store Activities
• Primary goal:
– Better optimization of the space within the entertainment
area
• Reduce the space dedicated to physical music & movies with the first
meaningful reduction since the shift to digital music.
– Improve inventory turns and eliminate &/or redeploy a significant amount
of physical media “tasking” SG&A costs.
• Give more space to gaming…
– To provide the in store environment to experience new motion based
gaming launches.
– To assort pre-owned video games.
• Free up space for expanded BBY Mobile SWAS
• Free up space for eReaders and Gadgets.
12
13. Holiday Store Activities - responds to the continued
declines in physical media
20102007
Use the space for
growth
opportunities
Significantly reduce
the space dedicated
to physical music &
movies this year
Center of Store in
typical 45k format
13
14. Holiday Store Activities - BBY Mobile SWAS expansion
Current Format of over 150 SWAS locations by holiday
• Approximate 25% increase to SWAS square footage
– Expanded accessory & no contract space
– Showcasing smart phones (8 end caps vs. current 4) & 7 inch tablets
– Displaying a 3 screen solution.
14
15. Holiday Store Activities - Used Gaming
• Game trade in & pre-owned games will be in nearly all stores before
Holiday.
• In a select number of stores there will be a dedicated trade in desk
(pictured above), but in most stores the trade in will occur at the
customer service desk.
• Customer receives a BBY gift card that can be used for anything in
the store. 15
Editor's Notes
As we have grown our customer base, we have also continued to transform our business model to generate a larger proportion of our profits from new categories other than just hardware. Common theme – we are a customer acquisition machine – with our customers – but also with our vendors’ customers. We are the logical choice for vendors to acquire customers – we bring a lot of value to our vendors. Win-Win-Win.A few examples of how we intend to capitalize on our position in this $325 billion digital content and connections marketplace and get paid for doing so include:Hardware & accessories: (~$165B in annual sales). Content : Best Buy CinemaNow (embedded on PCs, TVs or Blu-ray players) access new release movies and TV shows. We receive a portion of the proceeds for each of the movies and TV shows that are watched.Netflix: Setting up or upgrading a customers’ Netflix subscription – which also gives customers access to movies and TV shows delivered directly to their TVs.Services:Geek Squad: break fix, black tie protection or install. Financial services enables customers to finance their dreams on very attractive terms, often 0% interest over a standard 18 months.Connections:Best Buy Mobile (industry is 150M units in the U.S.). Spearhead of our CW efforts. Offers customers the best combination of smartphones, service plans, accessories and knowledgeable unbiased sales assistance . We get paid through the sales of these devices and through upfront and ongoing payments from carriers for signing up and upgrading customers. Broadband connected computers: Upfront and ongoing payments from carriers for signing up and upgrading customers. Broadband or HD upgrade at home: i.e. DirectTVotr Comcast . We have their labor in many of our stores. In both cases, we get an upfront payment every time we generate a new subscription.
