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certain products, such as mobile phones and tablets; (ii) expanding the range of our services to customers both in our
stores and remotely; and (iii) further increasing our service revenue from small and medium-sized business customers,
including through our mindSHIFT acquisition.
In China, we will continue to grow our Five Star business through approximately 50 new store openings and the
introduction of the Best Buy Mobile store-within-a-store concept during fiscal 2013.
Improved Customer Experience. Delivering outstanding experiences to our customers is a constant area of focus, and we
believe the strength of those experiences is an important differentiator for us. We continuously search for ways to improve our
customer interactions, whether in store, online or in customers' homes.
For example, our recently-announced “Perfect Match Promise” is based on a strategic message that we believe is important to
customers: 30 days of free telephone support to assist customers in using their products; 30 days of easy returns with no
restocking fees; and 30 days of competitor price matching.
In fiscal 2013, we also plan to enhance our Reward Zone loyalty program for premier level members. These enhancements
include: free expedited shipping; premier access to new technology, popular products and sales events; a free house call from a
Geek Squad agent; and extended returns and price-match benefits.
In order to support our focus on improving customer experience, we also plan to introduce enhanced training, recognition and
reward programs which will sharpen our employees' focus on delivering outstanding customer experiences.
Results of Operations
In order to align our fiscal reporting periods and comply with statutory filing requirements in certain foreign jurisdictions, we
consolidate the financial results of our Europe, China and Mexico operations on a two-month lag. Consistent with such
consolidation, the financial and non-financial information presented in our MD&A relative to these operations is also presented
on a two-month lag.
Our policy is to accelerate the recording of events occurring in the lag period that significantly affect our consolidated financial
statements. In November 2011, we announced plans to close our large-format Best Buy branded stores in the U.K. However, a
portion of the charges were not recorded until the stores were closed in January 2012. Accordingly, $82 million of restructuring
charges recorded by Best Buy Europe in January 2012 related to the store closures were included in our fiscal 2012 results.
Furthermore, in January 2012, we determined that the goodwill attributable to our Best Buy Europe reporting unit had been
fully impaired. Accordingly, we recorded the $1,207 million impairment charge in our fiscal 2012 results. Except for these
restructuring activities and the goodwill impairment, no significant intervening event occurred in these operations that would
have materially affected our financial condition, results of operations, liquidity or other factors had it been recorded during
fiscal 2012.
Discontinued Operations Presentation
During the fourth quarter of fiscal 2012, we began presenting the results of our large-format Best Buy branded stores in China,
Turkey and the U.K., The Phone House retail stores in Belgium, Napster and Speakeasy as discontinued operations in our
Consolidated Statements of Earnings. The discontinued operations presentation has been retrospectively applied to all prior
periods presented. Unless otherwise stated, financial results discussed herein refer to continuing operations.
Fiscal 2012 Summary
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Fiscal 2012 included a net loss of $1.2 billion from total operations (including both continuing and discontinued
operations), compared to net earnings of $1.3 billion in fiscal 2011. The net loss in fiscal 2012 was primarily due to our
decision to buy out of the Best Buy Mobile profit share agreement for $1.3 billion (the "Mobile buy-out"), as well as the
resulting $1.2 billion goodwill impairment in our Best Buy Europe reporting unit. Loss per diluted share from total
operations was $3.36 in fiscal 2012, compared to earnings per diluted share of $3.08 in fiscal 2011.
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Revenue increased 1.9% to $50.7 billion. The increase was driven primarily by the net addition of 235 new stores during
fiscal 2012, an extra week of revenue from stores in our Domestic segment and Canada, and the favorable impact of
foreign currency exchange rate fluctuations, partially offset by a comparable store sales decline of 1.7%.
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Our gross profit rate decreased by 0.4% of revenue to 24.8% of revenue. The decrease was driven by a decline in our
Domestic segment's gross profit rate primarily due to increased promotional activity and an increased sales mix of
promotional items.
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