Best Buy (BBY)
Q1 2012 Earnings Call
June 14, 2011 10:00 am ET
Barry Judge - Chief Marketing Officer and Executive Vice President
Michael Vitelli - Executive Vice President and President of Americas-Enterprise
Bill Seymour - Vice President of Investor Relations
James Muehlbauer - Chief Financial Officer and Executive Vice President of Finance
Shari Ballard - Executive Vice President and President of Americas-Enterprise
Brian Dunn - Chief Executive Officer and Director
Daniel Wewer - Raymond James & Associates, Inc.
Daniel Binder - Jefferies & Company, Inc.
Gary Balter - Crédit Suisse AG
Matthew Fassler - Goldman Sachs Group Inc.
Anthony Chukumba - BB&T Capital Markets
Brian Nagel - Oppenheimer & Co. Inc.
Unknown Analyst -
Scot Ciccarelli - RBC Capital Markets, LLC
Michael Baker - Deutsche Bank AG
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Thank you, Alicia. Good morning, everyone. Thank you for joining us on our fiscal first quarter 2012 conference call. We have 2 speakers today: Brian Dunn, our CEO; and Jim Muehlbauer, our CFO. And after our prepared remarks, we should have plenty of time to answer your questions.
Before I pass the call over to Brian, I'd like to take care of a few housekeeping items. First, we would like to request that callers limit themselves to a single question so that we can include more people in our Q&A session. Also, as usual, the media are participating in this call in a listen-only mode.
I'd like to highlight several enhancements we've made to our earnings material this quarter. First, we have included slides this quarter that complement the results. You'll find these slides on our IR site. We've also included a quarterly cash flow statement, and we've included -- started reporting total domestic connections quarterly. And we started reporting Best Buy Mobile comps. You will also see that we renamed the category home office to computing and mobile phones to better reflect what's in the category. Nothing in the category itself has changed.
Let me remind you that comments made by me or by others representing Best Buy may contain forward-looking statements, which are subject to risks and uncertainties. Our SEC filings contain additional information about factors that could cause actual results to differ from management's expectations. You will also note that our reported results this morning included information regarding the impact of the restructuring activities we announced on February 22. I ask that you please refer to our earnings release to understand how our announced restructuring affected our first quarter results within our Domestic and International segments and across the company as a whole. The adjusted numbers we will be discussing today, do not include these charges and should not be confused with GAAP numbers we reported this morning in our earnings release and the GAAP numbers we'll report in our 10-Q.
With those housekeeping items aside, I would like to turn the call over to Brian Dunn.
Good morning, everyone, and thanks for joining us on our first quarter earnings conference call. My comments this morning will focus on our first quarter performance and an update on our strategic priorities and opportunities.
It's early but I feel good about our start to this fiscal year. We delivered improved sales trends and continued to generate significant cash flow which illustrates the financial health and strength of our company. Our multichannel strategy clearly differentiates us from competitors and gives us unique opportunities to grow. We are optimizing our skill for growth in the key areas we previously discussed, new products and services like tablets and connections, categories where we have a competitive advantage and significant upside such as appliances and gaming and formats in new locations like Five Star in China and Best Buy Mobile standalone stores throughout the U.S.
But before I jump over to the highlights of the quarter, I would like to thank our employees worldwide, those who helped create compelling offers and value propositions, as well as the men and women who work so diligently to bring the Connected World to life for our customers. Thank you for everything you do to make Best Buy a great place to shop and work.
Now, let's take a look at some of the key items from the quarter. Our sales performance was better than planned. I'll provide more color on this in a minute. Our Domestic Online sales continue to grow at double-digit rates. As you know, we're committed to accelerating growth in our Internet business, and our progress here shows that our focus on this channel and our overall multichannel strategy is progressing. Total domestic connections grew 20% in the quarter. This growth shows the momentum of our Connected World vision, both in Best Buy Mobile and the increasingly rapid growth of connections in our TV and Computing businesses. And we continue to take actions to improve returns to shareholders. During the first quarter, we bought back $0.5 billion worth of stock, representing 4% of our outstanding shares.
Summarizing Q1, the quarter unfolded largely as we anticipated. We had been very deliberate in creating new offers that leverage our unique capabilities and leading position in the marketplace, and consumers are responding.
Let me review some drivers of our domestic performance in Q1. In Mobile Computing, we had improved performance overall, even against strong comparisons from last year. The biggest catalyst of our positive performance was the rapid growth in tablets as we successfully kicked off the launch of the iPad 2. Notebooks also improved versus the steeper declines we experienced in the second half of last year.