Best Buy Co., Inc. · NYSE:BBY
Best Buy — Investor Day (April 2010)
39 slides from Best Buy's investor day presentation, Apr 26, 2010
Slide 1: Carphone Warehouse Group plc Analysts' Day April 2010
Carphone Warehouse Group plc Analysts’ Day 26 April 2010
Slide 2: Agenda
Agenda Overview Strategy update Financial update and 2011 guidance Charles Dunstone Roger Taylor Nigel Langstaff
Slide 3: Charles Dunstone, Chairman: Overview
Charles Dunstone, Chairman Overview
Slide 4: An encouraging end to a successful year
An encouraging end to a successful year.... Financial Highlights: - Third upgrade in six months - Best Buy Europe profit ahead of expectations (primarily due to Best Buy Mobile US, profit share £46m) - Cash generation ahead (BBE operating free cash inflow pre ‘Big Box’ c.£170m vs £80m outflow last y
Slide 5: "Best Buy" comes to the UK
“Best Buy” comes to the UK c Cy cso AP sine oe # mubile
Slide 6: Roger Taylor, CEO CPW plc: Strategy Update
Roger Taylor, CEO CPW plc Strategy Update
Slide 7: CPW plc Group Structure
Carphone Warehouse Group plc CPW plc Group Structure Best Buy Europe 50% Virgin Mobile France 47.5% CPW Property 100% Cash £100m ‘Big Box’ 1st store to open this week c.1,100 stores in US c.2,400 stores across Western Europe
Slide 8: Smartphones driving growth
Carphone Warehouse......smartphones driving growth Source: Gartner Dataquest, Forecast: Mobile Devices Estimated 83% of mobile phones will be smartphones by 2013 4% 7% 5% 5% 5% 6% 7% 6% 4% 4% 3% 5% 7% 14% 22% 32% 36% 40% 15% 19% 31% 55% 70% 76% 81% 87% 86% 87% 92% 43% 41% 33% 17% 3% 3% 1% 9% 1% 8% 1
Slide 9: What increasing smartphone penetration means for CPW
What increasing smartphone penetration means for CPW Smartphones higher value per connection (average revenue per connection increasing, driving positive LFLs), Q4 LFL 3% Geek attachment: 44% on smartphones (vs 35% on non-smartphones) Accessories attachment: 36% on smartphones (vs 14% on non-smartph
Slide 10: "Wireless World" format working
“Wireless World”: confident that format working...... Currently 29 in UK, 7 in Spain >100 by April 2011 Success story for: Our People Our Customer The Store Environment Our Proposition The Geek Squad Service The Financials ......roll-out to drive further growth Stretching the brand to incorporate al
Slide 11: Trialling new formats for smaller stores
Trialling new formats to extend wireless world concept to smaller stores Current Store Portfolio: >1000 sq ft 250 700 – 1000 sq ft 400 <700 sq ft 1,780 2,430
Slide 12: Multi product wireless store in small format
We can do ‘multi product wireless store’ in small format ...... ......as seen in Alicante
Slide 13: The Connected World
Hardware Connections Content Services Accessories Smartphones Netbooks Laptops Tablet/slate The Connected World
Slide 14: UK in good shape, work to do in Europe
UK in good shape... but...work to do in Europe Some key changes in the business.... Operational efficiencies Commercial alignment with networks Customer focus (0% commission 100% impartial) .....are really starting to have an impact: Q4 UK LFL c.6% Continued market share gains (especially in smartph
Slide 15: The CPW business in the year ahead
The CPW business in the year ahead Economic environment remains tough but we still expect LFL growth Emphasis on quality of connections rather than quantity Margins more robust Continued focus on costs and improving net operating margin Overall profit growth of 15% to 20% Strong cash conversion
Slide 16: Best Buy Mobile US stores
Best Buy Mobile US 77 stand alone stores (SAS) and 1,070 stores within store (SWAS) as at March 2011 Opportunity to roll out significantly more SAS stores in FY11 and beyond With no other significant independent mobile specialists in the US there is good growth potential
Slide 17: Best Buy Mobile US: exceeded all expectations
Best Buy Mobile US: exceeded all expectations Q4 connections 1.43m (Jan – March 2010), up 34% yoy BBM U.S. market share at the end of Fiscal 2010 was approximately 4-5% (of U.S. handsets sold). Our current data suggests that there are approximately 130-140 million handsets sold per year in the U.S.
Slide 18: BBM US: tipping point around brand awareness
BBM US: tipping point around brand awareness Market share over last 4 years 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 2006 Q1 2006 Q2 2006 Q3 2006 Q4 2007 Q1 2007 Q2 2007 Q3 2007 Q4 2008 Q1 2008 Q2 2008 Q3 2008 Q4 2009 Q1 2009 Q2 2009 Q3 2009 Q4 Postpay Prepay Draw Rate by Category 3.3 2.7 6.2 4.3 4.0 6.7
Slide 19: The Perfect Partnership
The Perfect Partnership.... Smart provisioning systems Selling complex product Customer focused Operational experience (CPW brought time to effect a subscription down from 45 minutes to 10 minutes) Simplification of proposition Network relationships Creativity / innovation Customer centricity Strong
Slide 20: The Best Buy "Big Box" launch
The Best Buy “Big Box” launch 8-10 “Big Box” stores opened by March 2011 30,000 to 45,000 sq.ft First five: Thurrock, Essex Hedge End, Southampton Aintree, Liverpool Merry Hill, West Midlands Croydon, Surrey Online platform launched in Autumn 2010 c.£70 - £80m cash investment in 2010 / 2011: £35m -
Slide 21: Best Buy Key Initiatives: why are we so different?
Best Buy Key Initiatives: why are we so different? Uniquely positioned to deliver the connected world: ability to deliver complex solutions for customers Quality of staff and investment in training: every ‘blue shirt’ receives nine weeks upfront training and continuous development programmes Categor
Slide 22: Virgin Mobile France
Virgin Mobile France Standing start in 2006 to Number 4 in the French market, with 1.7 million customers, following the acquisition of Tele2 in December 2009 (consolidating its position as France’s largest MVNO) 60% of base post-pay customers Targeting 2 million customers FY 09 FY 10 Virgin customer
Slide 23: Virgin Mobile France: a valuable brand
Virgin Mobile France: a valuable brand Strong brand awareness: recent market research indicated 33 per cent spontaneous brand awareness and 93 per cent prompted brand awareness Reputation for innovation: introducing unlimited texts and more recently “all you can eat” packages to the French market Ou
Slide 24: Virgin Mobile France: developing the brand
Virgin Mobile France: developing the brand TDF deal signed last week: Mobile TV services will be included in all postpaid offers 14 channels will be available in all postpaid offers Premium offers will include 2 channels
Slide 25: Virgin Mobile France strategic objectives
Virgin Mobile France strategic objectives Full integration of Tele2 - migration to orange on Virgin terms complete - head office integration well underway - migration of billing and CRM by end 2010 Strong growth in customer base - targeting 2m by 2012 / 2013 - 100K - 150K net adds FY 2011 Targeting
Slide 26: Carphone Property
Carphone Property Acton Preston £m Book value of Freeholders 66 Current rental income 5.6 Market value at 8% yield 70 Market value at 6% yield 93 Long leases Strong covenants Further development opportunities
Slide 27: Nigel Langstaff, CFO: Financial update and 2011 guidance
Nigel Langstaff, CFO Financial update and 2011 guidance
Slide 28: 2009-10 indicative group financials
2009-10 – indicative group financials EPS growth substantially ahead of guidance at start of year, reflecting strong out-performance in Best Buy Europe 2008-09 2009-10 (£m) indicative only (£m) Revenue 5 5 Opex (5) (6) Post-tax P&L from JVs - Best Buy Europe 28 47 - Virgin Mobile France (8) (9) Net
Slide 29: 2009-10 indicative Best Buy Europe financials
2009-10 – indicative Best Buy Europe financials 18% growth from CPW Europe Transformational year for Best Buy Mobile Best Buy Europe OFCF before Big Box investment c.£170m, reflecting reduced capex and much improved working capital 2008-09 2009-10 (£m) indicative only (£m) - CPW Europe 97 114 - Best
Slide 30: 2010-11 guidance - Best Buy Europe PBT
2010-11 guidance - Best Buy Europe PBT Guiding for Group share of post-tax profits of £47m-£50m Growth in CPW Europe and Best Buy Mobile funding further investment in Big Box 2009-10 2010-11 indicative only (£m) (£m) - CPW Europe 114 + 15% to 20% - Best Buy Mobile US 46 + 15% to 20% - Big Box (Best
Slide 31: CPW Europe
CPW Europe Space up 0-1% LFL revenue growth of 0 to 3% (at constant currency) Connections 0-5% down, but ARPC up GM% expected to strengthen further Annualised cost savings from 2009 reorganisation programme Continued decline on German service provider revenue, as business migrates to retail model, r
Slide 32: Best Buy Mobile US
Best Buy Mobile US Connections and profit share growth 15-20% Increased contribution from existing sites partially offset by investment in SAS and online operations 2010-11 guidance - Best Buy Europe PBT 2009-10 2010-11 Indicative only (£m) (£m) - CPW Europe 114 + 15% to 20% - Best Buy Mobile US 46
Slide 33: Best Buy UK ('Big Box')
Best Buy UK (‘Big Box’) Support costs, IT, pre-trading losses Depreciation and amortisation of £7m to £8m 2010-11 guidance - Best Buy Europe PBT 2009-10 2010-11 Indicative only (£m) (£m) - CPW Europe 114 + 15% to 20% - Best Buy Mobile US 46 + 15% to 20% - Big Box (Best Buy UK) (21) (40) to (45) - In
Slide 34: Interest and Tax
Interest Annualised impact of standalone facilities Non-utilisation fees Amortisation of facility fees Impact of working capital requirements at peak trading periods Tax Continued mix of profits in lower tax jurisdictions 2010-11 guidance - Best Buy Europe PBT 2009-10 2010-11 Indicative only (£m) (£
Slide 35: 2010-11 guidance - Best Buy Europe cash flow
CPW Europe Capex investment in store refurbs and operational efficiency Working capital in line with FY10 Best Buy UK Capex on new stores Development of online platform and further development of IT systems 2010-11 guidance - Best Buy Europe cash flow 2009-10 2010-11 Indicative only (£m) (£m) CPW Eu
Slide 36: 2010-11 guidance - Virgin Mobile France
Annualised revenue following Tele2 acquisition of c €350m, growing by 10-15% in 2010-11 Target EBIT margin of 5% to 6%, with run-rate by end of year closer to 10% Capex investment of c €10m to “in-house” billing platform Minimal working capital No tax in the short to medium term due to availability
Slide 37: 2010-11 guidance - Group EPS
Rental income and interest income expected to cover cash opex EPS up by 40-45% Before investment in Best Buy UK, EPS of c.15p 2010-11 guidance – Group EPS 2009-10 2010-11 Indicative only (£m) (£m) Revenue 5 Similar Opex (6) (2) to (3) higher Post-tax P&L from JVs - Best Buy Europe 47 47 to 50 - Virg
Slide 38: 2010-11 reporting calendar
2010-11 reporting calendar Q1 trading Q2 trading / Interims Q3 trading Q4 trading / guidance update Prelims 28 July 2010 5 November 2010 January 2011 April 2011 June 2011 CPW Europe CPW Europe CPW Europe CPW Europe Stores Stores Stores Stores Connections Connections Connections Connections Revenue R
Slide 39: Q&A
Q&A