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A recap of Best Buy’s 2022 Investor Update

In addition to reporting our Q4 FY22 financial results today, Best Buy leaders also shared an update on the path ahead for the company as technology innovation continues to play a crucial role in our day-to-day lives, whether in our homes or for our health, and everything in between.

Speaking about the solid growth we’ve seen recently were Corie Barry, Best Buy CEO; Matt Bilunas, CFO; Jason Bonfig, Chief Merchandising Officer; Damien Harmon, Executive Vice President of Omnichannel; and Deborah Di Sanzo, President of Best Buy Health. They also gave a look ahead into new strategic initiatives and investments we’re making to better serve our customers.

“Every aspect of our lives has changed with technology, and we — uniquely — know how to make it human, in our customer’s homes, right for their lives,” Corie said.

Progress update

In 2019, we laid out long-term financial targets. We’re excited to share that we’re far ahead of where we expected to be. In the past two years, we’ve delivered more than $8 billion of revenue growth, earning approximately $51.8 billion of revenue in FY22 and surpassing our FY25 financial target ahead of schedule.

There are a few reasons we surpassed our target so quickly, including a growing consumer electronics industry and evolving our business to become much more digital. We’re constantly pivoting to meet our customers’ changing shopping needs, creating a more flexible and efficient operating model, and we continue to invest in our employees.

The Path Forward: Three Key Takeaways

There are three reasons we believe we have the right strategy to deliver growth and value for all stakeholders —shareholders, customers, employees and our communities — moving forward, according to Corie.

  1. Technology is a necessity, and Best Buy is the unique tech solutions provider for the home.
    Technology innovation never stops. It’s extending into all aspects of our home, and we’ve all grown to depend on it. What historically was seen as a “want” has now become a “need.”
  2. We’ve built an ecosystem of customer-centric assets, delivering experiences no one else can.
    This ecosystem — our expert advice and service, our Best Buy Totaltech membership program and our strength in providing an omnichannel retail experience — all work together to provide a unique experience tailored to our customers.
  3. Our differentiated abilities and ongoing investments in our business will drive compelling financial returns over time.
    We’re investing now, just like we’ve successfully invested ahead of change in the past, to meet the needs of our customers in the future.

A big part of our path forward is our Totaltech membership program. Since launching last October, we’ve enrolled more than one million members and we see a path to double the number of members by the end of FY25.

Expanding into new product categories

Over the next two years, we plan on expanding further into new product categories. Here are three examples:

  • Fitness and Wellness: In the last year, our product assortment has grown more than 650% and we plan to introduce a larger, more premium experience in 90 stores.
  • Personal Electric Transportation: We introduced 250 new products last holiday season, including e-bikes, scooters and hundreds of accessories. Over the next 18 months, we’ll add products to 900 stores, with 90 stores having a larger, more premium experience.
  • Outdoor Living: In addition to partnerships with brands like Traeger, Weber and Bromic, our recent acquisition of Yardbird, a leading premium outdoor furniture company, lets us provide our customers with more options and complements outdoor technology.

Our unique ecosystem and omnichannel retail investments

We continue to invest in our employees and stores to create a more seamless shopping experience as customers diversify the many ways that they interact with us. Here are a few reasons why:

  • Expert advice and service: Customers continue to love the service and expertise they get through our Geek Squad team and consultants. We believe annual consultations will grow by more than 200% by FY25.
  • Virtual Store: Last fall, we launched our Virtual Store, where customers can interact with our experts via chat, audio, video or screen sharing and see products, live demos and more without leaving their home. Customers and vendors love it. We expect our virtual sales interactions to double by FY25.

We’re also improving how our stores can best serve our customers’ needs in an ever-growing digital world. Here’s how:

  • We’re expanding the number of experiential stores by remodeling about 50 locations in the next year and transforming about 300 locations by FY25.
  • We plan to double the number of outlet stores in FY23 and expand beyond major appliances and televisions to also include computers, gaming consoles and mobile phones.
  • Additionally, we will keep learning from the different types of stores we are testing in Charlotte. (Also in Charlotte, this summer we plan to introduce a new, smaller 5,000-sq.-ft. store to the market.)

Best Buy Health strategy

Health is moving into the home, and we’re supporting consumers in their care at home journey. Our strategy is to enable care at home  by building on our strengths in three focal areas:

  1. Consumer health: We provide a sought-after digital health solutions for every stage of life, from exercise equipment to blood pressure cuffs to sleep technology and more.
  2. Active aging: Last year, we launched our new Lively brand. In addition to our Apple partnership to feature health and safety services on Apple Watch, we will launch additional Lively capabilities later this year.
  3. Virtual care: Perhaps the most exciting opportunity lies within virtual care, where we enable patients to connect with their care teams. Last November, we acquired Current Health, which when combined with Best Buy’s expertise and connection to the home we believe will create a powerful virtual care experience.

Our long-term goals

As we look to the future, we also highlighted the following employee, customer and financial goals for FY25:

  • Remain one of the best places to work. We will deepen our focus on training, recognition and career development, continue building on our industry-leading benefits, and aim to become a meaningfully more diverse and inclusive workforce.
  • Deepen our relationship with customers. We will provide expert advice and services, engage customers seamlessly across channels, and build confidence and peace of mind for our customers through our Totaltech membership.
  • Deliver top- and bottom-line growth. Our new revenue target for FY25 is now between $53.5 and $56.5 billion, a non-GAAP operating income rate between 6.3% and 6.8%, and a non-GAAP operating income between $3.4 and $3.8 billion.

We’re a company that knows the importance of change. We feel we’re positioned for future success as we continue to make investments in our employees and operations, offer unique experiences that meet our customers’ needs and remain flexible so we can adapt quickly when needed.

Read more about our Q4 and FY22 financial results.

Forward-Looking and Cautionary Statements: 

This post contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 as contained in Section 27A of the 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, operational investments, 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,” “assume,” “estimate,” “expect,” “intend,” “foresee,” “project,” “guidance,” “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: the duration and scope of the ongoing COVID-19 pandemic and its resurgence and the impact on demand for our products and services, levels of consumer confidence and our supply chain; the effects and duration of steps we have taken and will continue to take in response to the pandemic, including the implementation of our interim and evolving operating model; actions governments, businesses and individuals have taken and will continue to take in response to the pandemic and their impact on economic activity and consumer spending; the pace of recovery when the ongoing COVID-19 pandemic subsides; general economic uncertainty in key global markets and a worsening of global economic conditions or low levels of economic growth; competition (including from multi-channel retailers, e-commerce business, technology service providers, traditional store-based retailers, vendors and mobile network carriers), our expansion strategies, our focus on services as a strategic priority, our reliance on key vendors and mobile network carriers, our ability to attract and retain qualified employees, changes in market compensation rates, risks arising from statutory, regulatory and legal developments, macroeconomic pressures in the markets in which we operate, failure to effectively manage our costs, our reliance on our information technology systems, our ability to prevent or effectively respond to a privacy or security breach, our ability to effectively manage strategic ventures, alliances or acquisitions, our dependence on cash flows and net earnings generated during the fourth fiscal quarter, susceptibility of our products to technological advancements, product life cycle preferences and changes in consumer preferences, economic or regulatory developments that might affect our ability to provide attractive promotional financing, interruptions and other supply chain issues, catastrophic events, health crises, pandemics, our ability to maintain positive brand perception and recognition, product safety and quality concerns, changes to labor or employment laws or regulations, our ability to effectively manage our real estate portfolio, constraints in the capital markets or our vendor credit terms, changes in our credit ratings, any material disruption in our relationship with or the services of third-party vendors, risks related to our exclusive brand products and risks associated with vendors that source products outside of the U.S., including trade restrictions or changes in the costs of imports (including existing or new tariffs or duties and changes in the amount of any such tariffs or duties) and risks arising from our international activities. 

A further list and description of these risks, uncertainties and other matters can be found in the company’s annual report and other reports filed from time to time with the SEC, including, but not limited to, Best Buy’s Annual Report on Form 10-K filed with the SEC on March 19, 2021 and its Quarterly Reports on Form 10-Q filed with the SEC. Best Buy cautions that the foregoing list of important factors is not complete, and any forward-looking statements speak only as of the date they are made, and Best Buy assumes no obligation to update any forward-looking statement that it may make. 

A reconciliation of the projected non-GAAP operating income and non-GAAP operating income rate, which are forward-looking non-GAAP financial measures, to the most directly comparable GAAP financial measures, is not provided because the company is unable to provide such reconciliation without unreasonable effort. The inability to provide a reconciliation is due to the uncertainty and inherent difficulty predicting the occurrence, the financial impact and the periods in which the non-GAAP adjustments may be recognized. These GAAP measures may include the impact of such items as restructuring charges; price-fixing settlements; goodwill impairments; gains and losses on investments; intangible asset amortization; certain acquisition-related costs; and the tax effect of all such items. Historically, the company has excluded these items from non-GAAP financial measures. The company currently expects to continue to exclude these items in future disclosures of non-GAAP financial measures and may also exclude other items that may arise (collectively, “non-GAAP adjustments”). The decisions and events that typically lead to the recognition of non-GAAP adjustments, such as a decision to exit part of the business or reaching settlement of a legal dispute, are inherently unpredictable as to if or when they may occur. For the same reasons, the company is unable to address the probable significance of the unavailable information, which could be material to future results.