Best Buy Co., Inc. (BBY)

BBY 
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Best Buy Co. (BBY)

Q1 2014 Earnings Conference Call

May 21, 2013 08:00 AM ET

Executives

Hubert Joly - President and CEO

Sharon McCollam - CAO and CFO

Bill Seymour - VP, Investor Relations

Analysts

David Schick - Stifel, Nicolaus & Co., Inc.

Peter Keith - Piper Jaffray & Co.

David Strasser - Janney Montgomery Scott, LLC

Brian Nagel - Oppenheimer & Co.

Bradley Thomas - KeyBanc Capital Markets, Inc.

Alan Rifkin - Barclays Capital

Anthony Chukumba – BB&T Capital Markets

Presentation

Operator

Ladies and gentlemen, thank you for standing by. Welcome to Best Buy’s First Quarter Fiscal 2014 Earnings Conference Call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session. (Operator Instructions) As a reminder, this call is being recorded for playback and will be available by 12 p.m. Eastern Time today. (Operator Instructions) The call will end at 8.50 am Eastern Time.

I’d now like to turn the conference call over to Bill Seymour, Vice President of Investor Relations.

Bill Seymour

Good morning and thank you. Joining me on the call today are Hubert Joly, our President and CEO and Sharon McCollam, CAO and CFO. As usual, the media will be participating in this call in a listen-only mode. This morning’s conference call must be considered in conjunction with the press release that we issued earlier today. They both contain non-GAAP financial measures that exclude the impact of certain business events. These non-GAAP financial measures are provided to facilitate meaningful year-on-year comparisons, which should not be considered superior to or as a substitute for and should not be read in conjunction with the GAAP financial measures for the period.

A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures and an explanation of why these non-GAAP financial measures are useful is discussed in the supplemental schedule in this morning’s earnings release. Today’s press release and conference call also include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

These statements address the financial condition, results of operation, business initiatives, growth plans and prospects of the Company and are subject to risks and uncertainties that could cause actual results to differ materially from such forward-looking statements. Please refer to the Company’s current press release and SEC filings for more information on these risks and uncertainties.

The Company undertakes no obligation to update or revise any forward-looking statements to reflect events, circumstances that may arise after the date of this call. As a reminder, the first quarter of fiscal 2014 was the 13 week quarter versus 14 weeks in fiscal year 2013.

The extra week in fiscal 2013 added approximately $735 million in revenue, including $660 million in domestic and $75 million in international and $0.12 in diluted EPS.

It is also important to note that as a result of our previously announced definitive agreement to sell our 50% interest in Best Buy Europe, financial results for that business are now presented as discontinued operations in our financial statements. To assist investors with the financial modeling of this presentation, we have provided recast financial statements by quarter for fiscal years 2012 and 2013 on our Investor Relations website.

I will now turn the call over to Hubert.

Hubert Joly

Thank you, Bill, and good morning, everyone. Thank you for joining us. I'd like to begin today with an overview of our first quarter results as well as an update of our Renew Blue priorities. Then I'll turn the call over to Sharon to provide further details.

Before I do that, I would like to extend our thoughts and prayers to our teams and all of the people in Oklahoma City who have been affected by the tremendous devastation from the tornadoes yesterday. It is a terrible tragedy and our heartfelt sympathies and wishes our extended to all of them. At this moment, not all of our employees or employee families has been accounted for and remain in close contact with our regional leadership to ensure we're doing all that we can to support them in the moment of their greatness need and in the days and months ahead.

In the first quarter, we continued to make substantial progress on our Renew Blue priorities. This progress included number one, driving a 16% increase in Domestic comparable online sales; number two, improving our customer Net Promoter Score by over 300 basis points; number three, reaching an agreement with Samsung to establish Samsung Experience Shops in our retail stores and beginning their roll out; number four, negotiating overall rent reductions for a number of our stores and closing one large format store; and number five, eliminating $175 million in annualized SG&A and supply chain costs in addition to $150 million last quarter. We also entered into a definitive agreement to sell our 50% interest in our European joint venture as announced last month.

In addition, we reached an agreement with our founder and largest shareholder, Dick Shulze, to rejoin Best Buy as our Chairman Emeritus. Dick has been publicly support of Renew Blue and while he has decided not to rejoin our Board of Directors, we are thrilled and grateful to have his entrepreneurial mindset in these nearly five decades of experience available to us.

We've also added three new Board members, each strengthening the Board with their important contributions. Russ Fradin, the President and CEO of SunGard is the newest member of our Board. Before taking the hand of SunGard, Russ was CEO of Aon Hewitt and brings substantial experience in operations and executive compensation to the Board.

Read the rest of this transcript for free on seekingalpha.com