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Best Buy Reports First Quarter Results

Best Buy Co., Inc. (NYSE: BBY) today announced results for the 13-week first quarter (“Q1 FY15”) ended May 3, 2014 as compared to the 13-week first quarter (“Q1 FY14”) ended May 4, 2013.

Revenue     Q1 FY15     Q1 FY14
Revenue ($ in millions)     $9,035     $9,347
Comparable sales % change 1     (1.9%)     (1.4%)
Domestic Segment:            
Comparable sales % change     (1.3%)     (1.2%)
Comparable online sales % change     29.2%     16.3%
International Segment:            
Comparable sales % change     (5.8%)     (2.8%)
Operating Income     Q1 FY15     Q1 FY14
GAAP operating income as a % of revenue     2.2%     1.8%

Non-GAAP operating income as a % of revenue 2

    2.3%     2.0%
Diluted EPS     Q1 FY15     Q1 FY14
GAAP diluted EPS from continuing operations     $1.31     $0.29
Impact of non-restructuring asset impairments     0.02     0.02
Impact of restructuring charges     0.01     0.01
Benefit of income tax effect of Europe legal entity reorganization     (1.01)     0.00
Non-GAAP diluted EPS from continuing operations 2     $0.33     $0.32

Hubert Joly, Best Buy president and CEO, commented, “This quarter reflects continued progress in our Renew Blue transformation. From a financial perspective, we delivered just over $9 billion in revenue and a better-than-expected $0.33 in non-GAAP diluted earnings per share. As expected, Domestic comparable sales declined 1.3%, in a context where sales in the Consumer Electronics industry continued to decline. Nevertheless, we achieved market share gains in the U.S. 3, fueled by our improved price competitiveness and an enhanced customer experience focused on advice, service and convenience. This was evidenced by our 250 basis-point year-over-year improvement in our Net Promoter Score.”

Joly continued, “Our non-GAAP operating income rate improved 30 basis points, driven by an SG&A cost reduction of $161 million, or 105 basis points as a percent of revenue, partially offset by a 75-basis point decline in gross profit rate. Excluding the rate pressure from our previously communicated negative impacts – including the economics of our new credit card agreement, increased product warranty costs, and structural investments in pricing – our gross profit rate would have increased for the first time in several quarters due to the execution of our Renew Blue initiatives and more effective management of our promotional initiatives.”

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