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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 2022 OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
to
Commission File Number: 1-9595
BEST BUY CO., INC.
(Exact name of registrant as specified in its charter)
Minnesota (State or other jurisdiction of incorporation or organization)
41-0907483 (I.R.S. Employer Identification No.)
7601 Penn Avenue South
Richfield, Minnesota (Address of principal executive offices)
55423 (Zip Code)
(612) 291-1000 (Registrant's telephone number, including area code)
N/A (Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Common Stock, $0.10 par value per share
Trading Symbol BBY
Name of exchange on which registered New York Stock Exchange
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (? 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer
Accelerated Filer
Non-accelerated Filer
Smaller Reporting Company
Emerging Growth Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No
The registrant had 225,168,407 shares of common stock outstanding as of May 31, 2022.
BEST BUY CO., INC. FORM 10-Q FOR THE QUARTER ENDED APRIL 30, 2022
TABLE OF CONTENTS
Part I -- Financial Information
Item 1.
Financial Statements
a) Condensed Consolidated Balance Sheets as of April 30, 2022, January 29, 2022, and May 1, 2021
b) Condensed Consolidated Statements of Earnings for the three months ended April 30, 2022, and May 1, 2021
c) Condensed Consolidated Statements of Comprehensive Income for the three months ended April 30, 2022, and May 1, 2021
d) Condensed Consolidated Statements of Cash Flows for the three months ended April 30, 2022, and May 1, 2021
e) Condensed Consolidated Statements of Changes in Shareholders' Equity for the three months ended April 30, 2022, and May 1, 2021
f) Notes to Condensed Consolidated Financial Statements
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
Item 4.
Controls and Procedures
Part II -- Other Information
Item 1.
Legal Proceedings
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
Item 6.
Exhibits
Signatures
Table of Contents
3 3 3 4 5 6 7 8 13 22 23 23 23 23 24 25
2
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets $ in millions, except per share amounts (unaudited)
Assets Current assets
Cash and cash equivalents Short-term investments Receivables, net Merchandise inventories Other current assets
Total current assets Property and equipment, net Operating lease assets Goodwill Other assets Total assets
April 30, 2022
January 29, 2022
$
640 $
2,936 $
-
-
804
1,042
6,258
5,965
613
596
8,315
10,539
2,251
2,250
2,704
2,654
1,385 596
1,384 677
$
15,251 $
17,504 $
Liabilities and equity
Current liabilities
Accounts payable
$
Unredeemed gift card liabilities
Deferred revenue
Accrued compensation and related expenses
Accrued liabilities
Short-term debt
Current portion of operating lease liabilities
Current portion of long-term debt
Total current liabilities
Long-term operating lease liabilities
Long-term debt
Long-term liabilities
Contingencies (Note 10)
Equity
Preferred stock, $1.00 par value: Authorized - 400,000 shares; Issued and outstanding - none
Common stock, $0.10 par value: Authorized - 1.0 billion shares; Issued and outstanding - 224.6 million, 227.4 million and 250.4 million shares, respectively
Additional paid-in capital
Retained earnings
Accumulated other comprehensive income
Total equity
Total liabilities and equity
$
5,492 $ 284
1,101 336 771 636 15
8,635 2,121 1,170
558
-
22 -
2,417 328
2,767 15,251 $
6,803 $ 316
1,103 845 946 648 13
10,674 2,061 1,216 533
-
23 -
2,668 329
3,020 17,504 $
NOTE: The Consolidated Balance Sheet as of January 29, 2022, has been condensed from the audited consolidated financial statements.
See Notes to Condensed Consolidated Financial Statements.
Table of Contents
May 1, 2021
4,278 60
850 5,721
359 11,268 2,233 2,563
986 655 17,705
6,360 297 734 493 978 110 654 15
9,641 1,983 1,229
694
25 33 3,762 338 4,158 17,705
3
Condensed Consolidated Statements of Earnings $ and shares in millions, except per share amounts (unaudited)
Revenue Cost of sales Gross profit Selling, general and administrative expenses Restructuring charges Operating income Other income (expense):
Investment income (expense) and other Interest expense Earnings before income tax expense and equity in income of affiliates Income tax expense Equity in income of affiliates Net earnings
Basic earnings per share Diluted earnings per share
Weighted-average common shares outstanding: Basic Diluted
See Notes to Condensed Consolidated Financial Statements.
4
Table of Contents
Three Months Ended
April 30, 2022
May 1, 2021
$
10,647
$
11,637
8,294
8,922
2,353
2,715
1,890
1,988
1
(42)
462
769
(5)
3
(6)
(6)
451
766
110
172
-
1
$
341
$
595
$
1.50
$
2.35
$
1.49
$
2.32
226.8 228.4
253.1 256.7
Condensed Consolidated Statements of Comprehensive Income $ in millions (unaudited)
Net earnings Foreign currency translation adjustments, net of tax Comprehensive income See Notes to Condensed Consolidated Financial Statements.
5
Table of Contents
Three Months Ended
April 30, 2022
May 1, 2021
$
341
$
595
(1)
10
$
340
$
605
Condensed Consolidated Statements of Cash Flows $ in millions (unaudited)
Operating activities Net earnings Adjustments to reconcile net earnings to total cash provided by (used in) operating activities: Depreciation and amortization Restructuring charges Stock-based compensation Other, net Changes in operating assets and liabilities, net of acquired assets and liabilities: Receivables Merchandise inventories Other assets Accounts payable Income taxes Other liabilities Total cash provided by (used in) operating activities
Investing activities Additions to property and equipment Purchases of investments Other, net Total cash used in investing activities
Financing activities Repurchase of common stock Dividends paid Other, net Total cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents Decrease in cash, cash equivalents and restricted cash Cash, cash equivalents and restricted cash at beginning of period Cash, cash equivalents and restricted cash at end of period
See Notes to Condensed Consolidated Financial Statements.
6
Table of Contents
Three Months Ended
April 30, 2022
May 1, 2021
$
341 $
595
224
216
1
(42)
39
37
12
6
238 (297)
4 (1,296)
63 (713) (1,384)
210 (90)
(6) (630) 113 (304) 105
(215) (1) 3
(213)
(161) (90) (2)
(253)
(455) (199)
4 (650)
(927) (175)
13 (1,089)
2
5
(2,245)
(1,232)
3,205
5,625
$
960 $
4,393
Table of Contents
Condensed Consolidated Statements of Changes in Shareholders' Equity $ and shares in millions, except per share amounts (unaudited)
Balances at January 29, 2022 Net earnings, three months ended April 30, 2022 Other comprehensive loss:
Foreign currency translation adjustments, net of tax Stock-based compensation Issuance of common stock Common stock dividends, $0.88 per share Repurchase of common stock Balances at April 30, 2022
Common Shares 227.4 -
Additional
Retained
Common Stock Paid-In Capital Earnings
$
23 $
- $
2,668
-
-
341
1.7 (4.5) 224.6 $
(1) 22 $
39
9 4 (52)
- $
(203) (389) 2,417
Accumulated Other Comprehensive
Income (Loss)
$
329 $
-
(1)
-
-
-
-
$
328 $
Total 3,020 341
(1) 39
9 (199) (442) 2,767
Balances at January 30, 2021 Net earnings, three months ended May 1, 2021 Other comprehensive income:
Foreign currency translation adjustments, net of tax Stock-based compensation Issuance of common stock Common stock dividends, $0.70 per share Repurchase of common stock Balances at May 1, 2021
256.9 $ -
1.9 (8.4) 250.4 $
26 $ -
(1) 25 $
- $ -
37 19
3 (26) 33 $
4,233 $ 595
(178) (888) 3,762 $
328 $ -
10 -
338 $
4,587 595
10 37 19 (175) (915) 4,158
See Notes to Condensed Consolidated Financial Statements.
7
Table of Contents
Notes to Condensed Consolidated Financial Statements (unaudited)
1. Basis of Presentation
Unless the context otherwise requires, the use of the terms "Best Buy," "we," "us" and "our" in these Notes to Condensed Consolidated Financial Statements refers to Best Buy Co., Inc. and, as applicable, its consolidated subsidiaries.
In the opinion of management, the accompanying condensed consolidated financial statements contain all adjustments necessary for a fair presentation as prescribed by accounting principles generally accepted in the U.S. ("GAAP"). All adjustments were comprised of normal recurring adjustments, except as noted in these Notes to Condensed Consolidated Financial Statements.
Historically, we have generated a large proportion of our revenue and earnings in the fiscal fourth quarter, which includes the majority of the holiday shopping season. Due to the seasonal nature of our business, interim results are not necessarily indicative of results for the entire fiscal year. The interim financial statements and the related notes included in this Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended January 29, 2022. The first three months of fiscal 2023 and fiscal 2022 included 13 weeks.
In preparing the accompanying condensed consolidated financial statements, we evaluated the period from April 30, 2022, through the date the financial statements were issued for material subsequent events requiring recognition or disclosure. No such events were identified for the reported periods.
Total Cash, Cash Equivalents and Restricted Cash
Cash, cash equivalents and restricted cash reported on our Condensed Consolidated Balance Sheets are reconciled to the total shown on our Condensed Consolidated Statements of Cash Flows as follows ($ in millions):
Cash and cash equivalents Restricted cash included in Other current assets Total cash, cash equivalents and restricted cash
April 30, 2022
January 29, 2022
$
640 $
2,936 $
320
269
$
960 $
3,205 $
May 1, 2021
4,278 115
4,393
Amounts included in restricted cash are primarily restricted to use for product protection plans provided under our Best Buy Totaltech membership offering and self-insurance liabilities.
2. Restructuring
Mexico Exit and Strategic Realignment
In the third quarter of fiscal 2021, we made the decision to exit our operations in Mexico and began taking other actions to more broadly align our organizational structure in support of our strategy.
Charges incurred in our International segment primarily related to our decision to exit our operations in Mexico. All remaining stores in Mexico were closed in the first quarter of fiscal 2022 and we do not expect to incur material future restructuring charges related to the exit.
Charges incurred in our Domestic segment primarily related to actions taken to align our organizational structure in support of our strategy. During the first quarter of fiscal 2022, we recorded a $44 million credit primarily due to a reduction in expected termination benefits resulting from adjustments to previously planned organizational changes and higher-than-expected employee retention. As we continue to evolve our strategy, it is possible that we will incur material future restructuring costs, but we are unable to forecast the timing and magnitude of such costs.
All charges incurred related to the exit from Mexico and strategic realignment described above were from continuing operations and were presented as follows ($ in millions):
Inventory markdowns Asset impairments(1)
Termination benefits
Currency translation adjustment Other(2)
Statement of Earnings Location Cost of sales Restructuring charges Restructuring charges Restructuring charges Restructuring charges
Three Months Ended May 1, 2021
Domestic
International
Total
$
- $
(6) $
(6)
-
3
3
(44)
(1)
(45)
-
-
-
-
-
-
$
(44) $
(4) $
(48)
(1) Remaining net carrying value approximates fair value and was immaterial as of April 30, 2022. (2) Other charges are primarily comprised of contract termination costs.
8
Cumulative as of April 30, 2022
Domestic
International
Total
$
- $
17 $
17
10
63
73
83
19
102
-
39
39
-
6
6
$
93 $
144 $
237
................
................
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