Best Buy Co., Inc. · NYSE:BBY
Best Buy — FY2011 Earnings Presentation
38 slides from Best Buy's earnings presentation, Jun 14, 2011
Slide 1: Preliminary Results and Strategy Update
Carphone Warehouse Group plc Preliminary Results and Strategy Update 14th June 2011 Results for the year ended 31 March 2011
Slide 2: Agenda
Agenda Overview & financial highlights Charles Dunstone - Chairman Strategy update Roger Taylor - CEO Financial update & 2012 guidance Nigel Langstaff - CFO
Slide 3: A year of considerable success
A year of considerable success Headline Financial Highlights 2010-11 EPS of 15.0p (FY10: 8.3p) Dividend of 5.0p per share CPW Europe EBIT growth of 18% to £135m (FY10: £114m) Best Buy Mobile US profit share up 111% to £98m (FY10: £46m) Best Buy UK ‘Big Box’ EBIT losses of £62m (FY10: £21m) Virgin Mo
Slide 4: Outlook
Outlook “Challenging trading conditions ahead, however the Group is well positioned to maintain its momentum.” CPW Europe - well positioned Best Buy Mobile US - continued growth Best Buy UK ‘Big Box’ - continue to evaluate next steps for CE strategy Virgin Mobile France - focus on value creation
Slide 5: Strategy update
Strategy update Roger Taylor CEO
Slide 6: Group structure
Group structure Best Buy Europe 50% Virgin Mobile France 47.1% CPW Property 100% Cash ‘Big Box’ 10 stores open c.1,290 stores in US c.2,430 stores across Western Europe
Slide 7: The 'Wireless' journey
The ‘Wireless’ journey Standard CPW/TPH store Mobile phones Accessories Laptops, netbooks (limited) Dummy handsets ‘Wireless World’ store After New in-store environment Key customer segments Smartphone zone Smartphones / tablets laptops / netbooks Live devices Wide accessory range Geek Squad Walk Ou
Slide 8: 'Wireless World' - Product diversification, ranging & services
‘Wireless World’ - Product diversification, ranging & services Geek Squad penetration: +10% Accessories volume: +40% Postpay sales: +c.15% ‘Wireless World’ UK EUROPE Average sqft 1,000 - 1,600 900 - 1,600 Margin uplift c.20% c.20% Payback c.2 years c.3 years Capex £100 - £150k ‘Wireless World Essent
Slide 9: 'Wireless World' - What our customers say
‘Wireless World’ - What our customers say “I like it a lot, they’ve made it a place you want to spend time in.” “I would take their advice more seriously because it seems more upmarket.” Walk Out Working launched mid-Sep 2010 NPS – improved with take up of WOW Other initiatives
Slide 10: 'Wireless World' - Our 'Wireless' journey
‘Wireless World’ - Our ‘Wireless’ journey FY11 106 ‘Wireless World’ format stores across UK & Europe FY12 c.350-400 ‘Wireless World’ format stores across UK & Europe UK Europe Store aspirations Store aspirations 70% 100% 98% 90% 30% 0% 2% 10% FY10 FY11 FY12 FY15 Wireless World / Wireless World Essen
Slide 11: Smartphone revolution
Smartphone revolution Graphic created by CPW based on Gartner data. Source: Gartner, Inc., Forecast: Mobile Devices, 2008-2015, 1Q11 Update, Carolina Milanesi et al, March 17, 2011. (Chart descriptions simplified by CPW and data points based on CPW's definition of Western Europe for purpose of prese
Slide 12: Home of smartphones & tablets
Motorola Xoom (3G) BlackBerry PlayBook HTC Flyer (3G) HP Touchpad LG Optimus (3G) Home of smartphones & tablets Increase of 30-40% in global tablet forecasts in recent months Market forecast to be larger than current laptop/netbook market (2010: 185m) Global tablet market (m) Apple iPad 2 Source: La
Slide 13: Tablets - Get connected
Tablets - Get connected iPad initially driving high percentage of Wi-Fi only Inverse sales behaviour for latest entrants (more contract than hardware) Pricing points key
Slide 14: FREE tablet & FREE smartphone
FREE tablet & FREE smartphone
Slide 15: Connected tablets
CARPHONE WAREHOUSE GROUP PLC Connected tablets Tablet pice #Carphone warehouse Gi The Phone House mobile
Slide 16: Prepay market – a swing factor in the year ahead
Prepay market – a swing factor in the year ahead Top 5 sellers – prepay smartphones Blackberry Curve 9300 HTC Wildfire Nokia 5228 Blackberry Curve 8520 Samsung Galaxy Apollo £149.95 £99.95 £49.95 £119.95 £79.95 Economic environment Channel quality Pricing points Complexity & consultative sales appro
Slide 17: Effect of move to month contracts
Effect of move to 24 month contracts - + Significant H1 impact c.25% less upgrades Better network terms Upgrades / ‘Sleepers’ FY12 c.£20m impact on profit FY13 & beyond Significant profit upside Network terms alignment Volume effect 24 month contracts Smartphone upside Illustrative Postpay profits Q
Slide 18: Germany update
Germany update Sophisticated dealer business - ‘Mobile World Distribution’ Sold 3m handsets and c.400,000 postpay connections in FY11 Developed sales channels during the year Preferred distribution partner of all 4 mobile operators c.1,500 points of sale German Distribution market worth estimated EU
Slide 19: Other European markets
Other European markets Overall Improved management structure Operationally more efficient Renegotiating network commercials ‘Wireless World’ roll-out Belgium - exit Cash consideration EUR22m Subject to clearance from Belgian competition authorities Spain - back to growth Plans for up to 100 addition
Slide 20: CPW Europe - the year ahead
CPW Europe - the year ahead A year of transition in mobile marketplace EBIT guidance of flat to +10% + - ‘Wireless World’ stores driving growth in quality, customer experience & profitability Unknown prepay trends FY12 Continue to benefit from smartphones & development of tablet market Impact of 24
Slide 21: Best Buy Mobile US - Overview
Best Buy Mobile US - Overview FY11 FY10 Revenue c.$2.5b* - Connections 7.1m 5.5m Connections growth 28.2% 30.3% SAS Stores 190 77 SWAS Stores 1,101 1,070 > 13,000 dedicated specialists in stores > 10 carriers, 14 manufacturers & 132 handsets available in-store Wider online range with additional 60 h
Slide 22: Best Buy Mobile - Stores
Best Buy Mobile - Stores Stand-alone stores Average store size c.1,500 sqft FY12 target: c.325 stores* 5 year target: 600 - 800 stores Store-within-a-store Average store size End of FY 11: 370 larger format stores As at June 2011: 600 larger format stores Standard - 1,100 sqft Larger format - 1,400
Slide 23: Best Buy Mobile - Key value propositions & marketing
Best Buy Mobile - Key value propositions & marketing
Slide 24: Best Buy Mobile - Continued growth
Growth in connections LFL revenue growth & space growth Growth in awareness / draw rates Growth in market share Profit share growth of 20% - 30% Best Buy Mobile - Continued growth 20% growth Medium term market share aspiration of 10% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% Apr- 10 May- 10 Jun- 10 Jul-
Slide 25: Best Buy UK 'Big Box'
Best Buy UK ‘Big Box’ Continue to evaluate next steps in our multi-format/multi-channel CE strategy FY11: Loss of £62m 10 stores now open (June 2011) Aintree store
Slide 26: Financial update & 2012 guidance
Financial update & 2012 guidance Nigel Langstaff CFO
Slide 27: Best Buy Europe
Best Buy Europe FG] ccomenmme CG termoneriowe QED Pan. mubile
Slide 28: Best Buy Europe financials - PAT
Best Buy Europe financials - PAT 28% growth in PAT, despite incremental investment in Best Buy UK Best Buy Europe PAT £'m 2010-11 2009-10 YoY CPW Europe 135 114 Best Buy Mobile US 98 46 Best Buy UK (62) (21) EBIT 170 140 22% Interest (15) (16) Tax (34) (29) Profit after tax 121 95 28%
Slide 29: Best Buy Europe financials - EBIT
Best Buy Europe financials - EBIT Revenue ahead of expectations due to incremental dealer sales in Germany Continued strengthening of gross margins on core business Best Buy Europe EBIT £'m 2010-11 2009-10 YoY Revenue 3,572 3,529 1% Gross margin 990 1,037 GM% 27.7% 29.4% -170bp Opex (831) (852) Best
Slide 30: Best Buy Europe financials - cash flow
Best Buy Europe financials - cash flow 24% growth in operating cashflow from CPW Europe and Best Buy Mobile US Best Buy Europe cash flow £'m 2010-11 2009-10 YoY EBITDA pre-Best Buy UK 317 253 Working capital (35) (27) Capex (69) (54) OFCF pre-Best Buy UK 213 172 24% Best Buy UK (78) (44) Tax (44) (2
Slide 31: Best Buy Europe guidance - CPW Europe
Best Buy Europe guidance - CPW Europe CPW Europe 2011-12 Space Up 2-3% 350-400 Wireless World Growth opportunity in Spain LFL revenue + / - 2% 24 month contracts in UK Weak prepay segment Wireless World refits Improvements in Europe Tablets / accessories Prepay Christmas 2011 Connections Down 0 to 5
Slide 32: Best Buy Europe guidance - CPW Europe
Best Buy Europe guidance - CPW Europe £15m £10m £10m- £15m £20m £15m- £150m £20m £135m £135m 2010-11 EBIT German SP 24m Wireless GM / opex 2011-12 Prepay 2011-12 contracts World base Christmas upside
Slide 33: Best Buy Europe guidance - CPW Europe
Best Buy Europe guidance - CPW Europe H1 H2 Drivers of profit phasing 24m contracts German SP Wireless World Wireless World Connections YoY Down mid-single digit Up mid-single digit LFL Down mid-single digit Up mid-single digit EBIT YoY Down c.£25m Up £25m to £40m
Slide 34: Best Buy Europe guidance - Best Buy Mobile US
Best Buy Europe guidance - Best Buy Mobile US Best Buy Mobile US 2011-12 Space Up ~20% + 150 SAS, additional space in SWAS Connections Up ~20% SWAS space supports LFL growth EBIT Up 20-30% Reinvestment in growth
Slide 35: Best Buy Europe guidance - other
Best Buy Europe guidance - other Best Buy Europe 2011-12 Interest Flat Likely lower ongoing cash cost Tax 23-24% Lower UK rate OFCF (ex BBUK) Similar EBITDA growth Additional capex for Wireless World
Slide 36: Virgin Mobile France
Virgin Mobile France CG] ecomenmmee i termonerowe LEP Pan. mubile
Slide 37: Group
CARPHONE WAREHOUSE GROUP PLC Group CG] secomenmme i mermonetowe LEP Pas. mubile
Slide 38: Q&A
CARPHONE WAREHOUSE GROUP PLC Q&A