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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

ý

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the fiscal year ended March 1, 2008February 28, 2009

OR

o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the transition period from                           to                            

Commission file number 1-9595

BEST BUY CO., INC.

(Exact name of registrant as specified in its charter)

Registrant's telephone number, including area code 612-291-1000

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ý Yes o No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. o Yes ý No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ý Yes o No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act) o Yes ý No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). o Yes o No

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant as of August 31, 2007,30, 2008, was approximately $11.3$11.6 billion, computed by reference to the price of $43.95$44.77 per share, the price at which the common equity was last sold on August 31, 2007,30, 2008, as reported on the New York Stock Exchange-Composite Index. (For purposes of this calculation all of the registrant's directors and executive officers are deemed affiliates of the registrant.)

As of April 25, 2008,27, 2009, the registrant had 411,795,260416,280,233 shares of its Common Stock issued and outstanding.

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DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant'sregistrant's definitive Proxy Statement dated May 12, 20082009 (to be filed pursuant to Regulation 14A within 120 days after the Registrant'sregistrant's fiscal year-end of March 1, 2008)February 28, 2009), for the regular meeting of shareholders to be held on June 25, 200824, 2009 ("Proxy Statement"), are incorporated by reference into Part III.

CAUTIONARY STATEMENT PURSUANT TO THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

Section 27A of the Securities Act of 1933, as amended ("Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended ("Exchange Act"), provide a "safe harbor" for forward-looking statements to encourage companies to provide prospective information about their companies. With the exception of historical information, the matters discussed in this Annual Report on Form 10-K are forward-looking statements and may be identified by the use of words such as "anticipate," "believe," "estimate," "expect," "intend," "foresee," "plan," "project," "outlook," and other words and terms of similar meaning. Such statements reflect our current view with respect to future events and are subject to certain risks, uncertainties and assumptions. A variety of factors could cause our future results to differ materially from the anticipated results expressed in such forward-looking statements. Readers should review Item 1A,Risk Factors, of this Annual Report on Form 10-K for a description of important factors that could cause future results to differ materially from those contemplated by the forward-looking statements made in this Annual Report on Form 10-K. In addition, general domestic and foreign economic conditions, acquisitions and development of new businesses, product availability, new product introductions, sales volumes, the promotional activity of our competitors, profit margins, weather, foreign currency fluctuation, availability of suitable real estate locations, disaster recovery response times, and the impact of labor markets on our overall profitability, among other things, could cause our future results to differ materially from those projected in any such forward-looking statements.

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BEST BUY    FISCAL    20082009    FORM 10-K

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PART I

Item 1. Business.

Description of Business

Unless the context otherwise requires, the use of the terms "Best Buy," "we," "us" and "our" in this Annual Report on Form 10-K refers to Best Buy Co., Inc. and, as applicable, its consolidated subsidiaries. Best Buy isWe are a specialty retailer of consumer electronics, home office products, entertainment software, appliances and related services. We operate retail stores and Web sites under thea variety of brand names such as Best Buy (BestBuy.com, BestBuy.ca, BestBuy.com.cn, andespanol.BestBuy.com, BestBuyMobile.com), The Carphone Warehouse (CarphoneWarehouse.com), Five Star (Five-Star.cn), Future Shop (FutureShop.ca), Geek Squad (GeekSquad.com and GeekSquad.ca), Magnolia Audio Video (MagnoliaAV.com), Napster (Napster.com), Pacific Sales Kitchen and Bath Centers (PacificSales.com), The Phone House (PhoneHouse.com) and Speakeasy (Speakeasy.net). References to our Web site addresses do not constitute incorporation by reference of the information contained on the Web sites.

Our vision is to make life fun and easy for consumers. Our business strategy is to treat customers as unique individuals, meeting their needs with end-to-end solutions, and engaging and energizing our employees to serve them, and meeting their needs with end-to-end solutions, while maximizing overall profitability. We believe we offer consumers meaningful advantages in store environment, multi-channel shopping, product value, product selection, and a variety of in-store and in-home services related to the merchandise we offer, all of which advance our objectives of enhancing our business model, gaining market share and improving profitability.

Information About Our Segments

During fiscal 2008,2009, we operated two reportable segments: Domestic and International. The Domestic segment is comprised of the store, call center and online operations in all states, districts and territories of the United States and includes store, call center and online operations, includingU.S. operating under the brand names Best Buy, Best Buy Mobile, Geek Squad, Magnolia Audio Video, Napster, Pacific Sales Kitchen and Bath Centers ("Pacific Sales") and Speakeasy. U.S. Best Buy stores offer a wide variety of consumer electronics, home office products, entertainment software, appliances and related services. Best Buy Mobile offersstand-alone stores offer a wide selection of mobile phones, accessories and related services.services in a small-format store. Geek Squad provides residential and commercial computerproduct repair, support and installation services. Magnolia Audio Video stores offer high-end audio and video products and related services. Napster is an online provider of digital music. Pacific Sales stores offer high-end home-improvement products including primarily appliances, consumer electronics and related services. Speakeasy provides broadband, voice, data and information technology services. services to small businesses.

The International segment is comprised ofof: (i) all Canada store, call center and online operations, includingoperating under the brand names Best Buy, Best Buy Mobile, Future Shop and Geek Squad, as well asSquad; (ii) all Europe store, call center and online operations, operating under the brand names The Carphone Warehouse, The Phone House and Geek Squad; (iii) all China store, call center and online operations, includingoperating under the brand names Best Buy, Geek Squad and Jiangsu Five Star Appliance Co. ("Five Star").and (iv) all Mexico store operations, operating under the brand names Best Buy and Geek Squad. Our International segment offers products and services similar to that of our U.S. Best Buy stores. However, Canada Best Buy Canada stores do not carry appliances. Further, our Chinaappliances and Best Buy storeChina stores and Five Star stores do not carry entertainment software. Further, our store format and offerings in Europe are similar to our Best Buy Mobile format and offerings in the U.S., primarily offering mobile phones and related accessories and services.

Financial information about our segments is included in Item 7,Management's Discussion and Analysis of Financial Condition and Results of Operations, and Note 9,11,Segment and Geographic Information, of the Notes to Consolidated Financial Statements, included in Item 8,Financial Statements and Supplementary Data, of this Annual Report on Form 10-K.

Domestic Segment

We were incorporated in the state of Minnesota in 1966 as Sound of Music, Inc. We began as an audio components retailer and, with the introduction of the videocassette recorder in the early 1980s, expanded into video products. In 1983, we changed our name to Best Buy Co., Inc. and began using mass-merchandising techniques, which included offering a wider variety of products and operating stores under a "superstore" concept. In 1989, we dramatically changed our method of retailing by introducing a self-service, noncommissioned,

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discount-style store concept designed to give the customer a variety of brands and more control over the purchasing process.

In fiscal 2000, we established our first online shopping site, BestBuy.com. Our "clicks-and-mortar" strategy is designed to empower consumers to research and purchase products seamlessly, either online or in our retail stores. Our online shopping sites offer expanded assortments in all of our principal revenue categories.

In fiscal 2001, we acquired Magnolia Hi-Fi, Inc. — a Seattle-based, high-end retailer of audio and video products and services — to access an upscale customer segment. During fiscal 2004, Magnolia Hi-Fi began doing business as Magnolia Audio Video.

In fiscal 2003, we acquired Geek Squad Inc. Geek Squad provides residential and commercial computer repair, support and installation services. We acquired Geek Squad to further our plans of providing technology support services to customers. Geek Squad service is available in all Best Buy stores, as well as in sevensix stand-alone stores in the U.S. Our goal is to build Geek Squad into one of the largest multi-national providers of residential and commercial computerproduct repair, and support and installation services.

In fiscal 2005, we opened our first Magnolia Home Theater store-within-a-store experience in a U.S. Best Buy store. We believe Magnolia Home Theater — with its high-end brands, home-like displays and specially trained employees — offers a unique solution for our customers. The Magnolia Home Theater store- within-a-store experience was in 346353 U.S. Best Buy stores at the end of fiscal 2008.2009.

In fiscal 2005, we also began converting U.S. Best Buy stores to our customer centricity operating model. Stores operating under the customer centricity model and we completed this transition in fiscal 2007. These stores offer variations in product assortments, staffing, promotions and store design, and are focused on key customer segments. The segmented stores tailor their store merchandising, staffing, marketing and presentation to address specific customer groups. Originally, these customer groups included affluent professional males, young entertainment enthusiasts who appreciate a digital lifestyle, upscale suburban mothers, families who are practical technology adopters and small businesses.

In fiscal 2007, we completed the transition of all remaining U.S. Best Buy stores to the customer centricity operating model. Also in fiscal 2007, we evolved our customer centricity segmentation to address the needs of customer lifestyle groups, rather than specific customer groups. Our stores now focus on lifestyles such as affluent suburban families, trend-setting urban dwellers, and the closely knit families of Middle America.

In fiscal 2007, we acquired Pacific Sales.Sales Kitchen and Bath Centers, Inc. ("Pacific Sales"). Pacific Sales specializes in the sale of high-endultra-premium and mass-premium kitchen appliances, plumbing fixtures and home entertainment products, and home furnishings, with a focus on builders and remodelers. We acquired Pacific Sales to enhance our ability to grow with an affluent customer base and premium brands using a proven and successful showroom format. UtilizingWith minimal changes to the existing store format, we expect to increase the number of stores over time in order to capitalize on the high-end segment of the U.S. appliancehome market.

In fiscal 2007, we developed the Best Buy Mobile concept through a management consulting agreement with The Carphone Warehouse Group PLC ("CPW") and test marketed five stand-alone stores located in New York. Best Buy Mobile seeks to satisfy the needs of all our customer lifestyle groups by providing a comprehensive assortment of mobile phones, accessories and related services offered by experienced sales personnel in 181all U.S. Best Buy stores and eight Best Buy Canada stores, as well as nine38 stand-alone stores located in New York and North Carolina at the end of fiscal 2008. During the next 18 months, we plan to add the Best Buy Mobile store-within-a-store experience to the majority of U.S. Best Buy stores.2009.

In fiscal 2008, we acquired Speakeasy.Speakeasy Inc. ("Speakeasy"). Speakeasy provides broadband, voice, data and information technology services. We believe our acquisition of Speakeasy will generate synergies by providing new technology solutions for our existing and future customers.

At March 1, 2008,In fiscal 2009, we operated 923 U.S. Best Buyacquired Napster, Inc. ("Napster"). We believe Napster provides one of the most comprehensive and easy-to-use digital download music offerings in the industry. We also believe that the combined capabilities of our two companies will allow us to build stronger relationships with customers and expand the number of subscribers.

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The following table lists by brand name the number of stores, total square footage and average revenue per store in 49 states, the District of Columbia and Puerto Rico that averaged approximately 39,700 retail square feet. Collectively, U.S. Best Buy stores totaled approximately 36.7 million retail square feetour Domestic segment at the end of fiscal 2008, or about 76% of our total retail square footage. In fiscal 2008, our U.S. Best Buy stores generated average revenue of approximately $37.6 million per store.

At March 1, 2008, we operated 19 Pacific Sales stores in California that averaged approximately 34,000 retail square feet. Collectively, Pacific Sales stores totaled approximately 0.6 million retail square feet at the end of fiscal 2008, or about 1% of our total retail square footage. In fiscal 2008, our Pacific Sales stores generated average revenue of approximately $18.7 million per store.

At March 1, 2008, we operated 13 Magnolia Audio Video stores in California, Oregon and Washington that averaged approximately 11,600 retail square feet. Collectively, Magnolia Audio Video stores totaled approximately 0.2 million retail square feet at the end of fiscal 2008, or less than 1% of our total retail square footage. In fiscal 2008, our Magnolia Audio Video stores generated average revenue of approximately $7.2 million per store.

At March 1, 2008, we operated nine Best Buy Mobile stand-alone stores in New York and North Carolina that2009:

averaged approximately 1,400 retail square feet. Collectively, Best Buy Mobile stand-alone stores totaled approximately 13,000 retail square feet at the end of fiscal 2008, or less than 1% of our retail square footage.

At March 1, 2008, we operated seven Geek Squad stand-alone stores in California, Colorado, Georgia, Minnesota and Texas that averaged approximately 2,000 retail square feet. Collectively, Geek Squad stand-alone stores totaled approximately 14,000 retail square feet at the end of fiscal 2008, or less than 1% of our retail square footage.

International Segment

Our International segment was established in connection with our acquisition of Canada-based Future Shop Ltd. ("Future Shop") in fiscal 2002. The Future Shop acquisition provided us with an opportunity to increase revenue, gain market share and leverage our operational expertise in consumer electronics retailing. Since the acquisition, we have continued to build on Future Shop's position as the leading consumer electronics retailer in Canada.

During fiscal 2003, we launched our dual-branding strategy in Canada by introducing the Best Buy brand. The dual-branding strategy allows us to retain Future Shop's brand equity and attract more customers by offering a choice of store experiences. As we expand the presence of Best Buy stores in Canada, we expect to gain continued operating efficiencies by leveraging our capital investments, supply chain management, advertising, merchandising and administrative functions. Our goal is to reach differentiated customers with each brand by giving them the unique shopping experiences they desire. The primary differences between our two principal brands in Canada are:

In-store experience— The customer's interaction with store employees is different at each of the two brands. Future Shop stores have predominantly commissioned sales associates who take a more proactive role in assisting customers. Through their expertise and attentiveness, the sales associate drives the transaction. In contrast, Canada Best Buy Canada store employees, like employees in U.S. Best Buy stores, are noncommissioned, and the stores offer more interactive displays and grab-and-go merchandising. This design allows customers to drive the transaction as they experience the products themselves, with store employees available to demonstrate and explain product features.

Products and services— Only Future Shop stores carry appliances. In addition, Geek Squad service is available in all Canada Best Buy Canada stores, but is not available in Future Shop stores.

Store size— At the end of fiscal 2008,2009, the average Future Shop store was approximately 26,600 retail26,700 square feet, compared with an average of approximately 33,200 retail32,500 square feet for Canada Best Buy Canada stores. Canada Best Buy Canada stores generally have wider aisles, as well as more square footage devoted to entertainment software.

In fiscal 2007, we acquired a 75% interest in Jiangsu Five Star Appliance Co., Ltd. ("Five Star"), one of China's largest appliance and consumer electronics retailers. We made the investment in Five Star to further our international growth plans, to increase our knowledge of Chinese customers and to obtain an immediate retail presence in China. We have a contractual commitment to acquireIn the fourth quarter of fiscal 2009, we completed the acquisition of the remaining 25% interest in Five Star within the next several years, subject to Chinese government approval.Star.

In fiscal 2007, we opened our first China Best Buy China store, located in Shanghai. In fiscal 2009, we furthered our expansion of Best Buy in China by opening an additional four stores.

In fiscal 2009, we acquired a 50% share in Best Buy Europe Distributions Limited ("Best Buy Europe"). Best Buy Europe is a venture with CPW, consisting of CPW's former retail and distribution business with over 2,400 The Carphone Warehouse and The Phone House stores, online channels as well as device insurance operations and mobile and fixed-line telecommunication services. The transaction also included CPW's economic interest in both Best Buy Mobile in the U.S. and the Geek Squad in the U.K. and Spain. We made the investment in Best Buy Europe to further our international growth plans, to increase our knowledge of European customers and to obtain an immediate retail presence in Europe. We plan to open fivelaunch large-format Best Buy-branded stores and related online channels in the European market beginning in fiscal

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2011. The primary features of Best Buy Europe's small-format stores are:

In-store experience— Stores have predominantly commissioned sales associates who provide independent advice on the best service and hardware suited to each customer. The Carphone Warehouse and The Phone House stores offer interactive displays which allow customers to experience the products themselves, with store employees available to demonstrate and explain product features. Most phone sales require an in-store registration process between the customer and the mobile network operator facilitated by our employees via our systems. Typically, credit checks and registration carried out in conjunction with the mobile network operator systems are on-the-spot, and the customer can leave the store with a fully active phone and service contract. There is also grab-and-go merchandising mainly in the form of mobile phone, laptop and gaming accessories.

Products and services— Best Buy Europe primarily sells mobile phone connections. A connection is defined as the sale and activation of mobile phone service, and it is usually combined with the sale of a subsidized handset. Our stores also sell mobile phones without a connection. Connections are either subscription-based, for which the customer commits to a contracted term with a mobile network operator, typically for 12 to 24 months, or pre-pay, for which a customer pays for usage but has no ongoing obligation. In addition, we sell mobile phone accessories. We recently expanded our product portfolio to include laptops, mobile broadband connections, gaming consoles, accessories and software. Geek Squad service is available in certain stores in the U.K. and Spain.

Best Buy Europe also offers a range of insurance products to its customers, providing protection primarily for the replacement of a lost, stolen or damaged handset. Finally, Best Buy Europe offers mobile telecommunication services in Germany and the U.K., fixed-line telecommunication services in Spain and Switzerland, and billing management services.

Store size— At the end of fiscal 2009, the average store for The Carphone Warehouse and The Phone House was approximately 600 retail square feet.

In fiscal 2009, we expanded our Best Buy Mobile operations to Canada by opening three stand-alone stores and eight additionalstore-within-a-store experiences in our Best Buy stores in China during fiscal 2009.

In fiscal 2008, we expanded Geek Squad to the United Kingdom throughand opened our relationship with CPW.

At March 1, 2008, we operated 131 Future Shop stores throughout all of Canada's provinces and 51 Canadafirst Best Buy Mexico store, located in Mexico City.

The following lists by geographic location the number of stores, total square footage and average revenue per store in seven provinces: Alberta, British Columbia, Manitoba, Nova Scotia, Ontario, Quebec and Saskatchewan. Collectively, our stores in Canada totaled approximately 5.2 million retail square feetInternational segment at the end of fiscal 2008, or about 11%2009:

(1)

Europe consists of our total retail square footage. In fiscal 2008, our897 The Carphone Warehouse stores in the U.K. and 1,568 The Phone House stores throughout continental Europe.

(2)

Canada consists of 139 Future Shop stores, 58 Best Buy Canada stores generated average revenueand three Best Buy Mobile Canada stores.

(3)

China consists of approximately $30.9 million per store.

At March 1, 2008, we operated 160164 Five Star stores in seven of China's 34 provinces and one China Best Buy store in Shanghai. Collectively, our stores in China totaled approximately 5.9 million retail square feet at the end of fiscal 2008, or about 12% of our total retail square footage. In fiscal 2008, our China retail stores generated average revenue of approximately $8.8 million per store.

As previously announced, we plan to open two to five Best Buy stores in China stores.

(4)

Mexico inconsists of one Best Buy Mexico store which was opened during the second halffourth quarter of fiscal 2009. The Fiscal 2009 and project that we will open one or two Best Buy storesAverage Revenue per Store represents revenue generated for the period the store was in Turkey in the early part of fiscal 2010.

operation.

We consolidate the financial results of our Europe, China and Mexico operations on a two-month lag. Consistent with such consolidation, the financial and non-financial information presented in this filing relative to our Europe, China and Mexico operations is also presented on a two-month lag.

Operations

Domestic Segment

U.S. Best Buy store operations are organized into eight territories. Each territory is divided into districts and is under the management of a retail field officer who oversees store performance through district managers. District managers monitor store operations and meet regularly with store managers to discuss merchandising, new product introductions, sales promotions, customer loyalty programs, employee satisfaction surveys and store operating performance. Advertising, merchandise purchasing and pricing, as well as inventory policies, are generally controlled centrally.

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U.S. Best Buy stores are generally open 80 hours per week, seven days a week, with extended holiday hours. A typical store is staffed by one general manager and four assistant managers. The average staff per store in fiscal 20082009 was approximately 11099 employees, including full-time, part-time and seasonal employees, and varied by store depending on sales volumes.

We have developed for the U.S. Best Buy stores use a standardized and detailedstandard operating procedure called our Standard Operating Platformplatform ("SOP"). The SOP that includes procedures for inventory management, transaction processing, customer relations, store administration, product sales and services, and merchandise display. All U.S. Best Buy stores are intended togenerally operate in the same manner under the SOP.SOP adjusted to local customer needs.

U.S. Best Buy Mobile stand-alone stores are generally open 73 hours a week, seven days a week, with extended holiday hours. During fiscal 2009, a typical store was staffed with one general manager, and an average of six to seven additional sales associates, including full-time, part-time and seasonal employees, which varied depending on the sales volume of each respective store.

Pacific Sales stores are typically managed by a store manager who also sells appliances. Pacific Sales stores are generally open 40 hours per week, five days a week. Depending on an individual store's volume and product offerings, store staffing includes approximately 10nine noncommissioned sales personnel and approximately four sales support personnel. Corporate management for Pacific Sales stores generally controls advertising, merchandise purchasing and pricing, as well as inventory policies.

Magnolia Audio Video stores are typically managed by a store manager and an audio/video sales manager. Magnolia Audio Video stores are generally open 72 hours per week, seven days a week. Depending on an individual store's volume and product offerings, store staffing includes eight to 20 commissioned sales personnel and one to three hourly personnel. Corporate management for Magnolia Audio Video stores generally controls advertising, merchandise purchasing and pricing, as well as inventory policies.

International Segment

The Carphone Warehouse and The Phone House stores in Europe are significantly smaller than our Best Buy stores, with approximately 9,000 full-time and part-time sales associates across 2,465 Best Buy Europe stores. The stores are generally staffed with a general manager and three to four sales associates. Europe stores are generally open 60 to 80 hours per week, seven days a week. Area managers are responsible for several stores within a particular region and regional managers manage regions within a particular geography. Advertising, merchandise purchasing and pricing, and inventory policies for our stores are controlled by corporate management in each respective local market. Meetings involving store management and corporate management are held on a regular basis to review operating results and to establish future objectives.

Canada store operations are organized to support two brands, each headed by a senior vice president.brands. Each senior vice presidentbrand has national management that closely monitors store operations and meets regularly with store managers to review management and staff training programs, customer feedback and requests, store operating performance and other matters. Meetings involving store management, product managers, and advertising, financial and administrative staff, as well as senior management, are held quarterly to review operating results and to establish future objectives.

Canada stores are generally open 60 to 75 hours per week, seven days a week. An average Future Shop store is staffed by a general manager, an operations manager, one to four department managers and 50 to 150 sales associates, including full-time and part-time sales associates. An average Canada Best Buy Canada store is staffed with a general manager; assistant managers for operations, merchandising, inventory, sales and services; and 80 to 110 sales associates, including full-time and part-time sales associates. The number of sales associates is dependent upon store size and sales volume.

Canada stores use a standardized operating system. The operating system that includes procedures for inventory management, transaction processing, customer relations, store administration, staff training, and performance appraisals as well asand merchandise display. Advertising, merchandise purchasing and pricing, and inventory policies are centrally controlled.

Five Star stores are generally open 77 to 84 hours per week, seven days a week. A typical Five Star store is staffed by a general manager;manager, six to 10 department managers;managers, 27 to 100 full-time sales associates;associates, and 50 to 200 vendor employees who sell products. Corporate management at Five Star centrally controls advertising, merchandise purchasing and pricing and inventory policies

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for major brand products, while management for individual regions control these operations for local

brands. Meetings involving store management and corporate management are held on a regular basis to review operating results and establish future objectives.

Our China Best Buy store employsChina stores employ an operating model similar to our U.S. Best Buy stores in the U.S. and CanadaCanada. Our Best Buy stores. Our China Best Buy store isstores are staffed with a general manager; assistant managers for operations, merchandising, inventory and sales; and approximately 260181 sales associates, including full-time and part-time sales associates. Advertising, merchandise purchasing, and pricing and inventory policies for our China Best Buy storeChina stores are centrally controlled by corporate management. Meetings involving store management and corporate management are held on a regular basis to review operating results and to establish future objectives.

Our Best Buy Mexico store employs an operating model similar to that used in our U.S. Best Buy stores.

Merchandise and Services

Domestic Segment

U.S. Best Buy stores have offerings in six revenue categories: consumer electronics, home office, entertainment software, appliances, services and other. Consumer electronics consists of video and audio products. Video products include televisions, digital cameras and accessories, digital camcorders and accessories and DVD players. Audio products includeconsists of MP3 players and accessories, navigation products, home theater audio systems and components, and mobile electronics includingsuch as car stereo and satellite radio products. The home office revenue category includes notebook and desktop computers, monitors, mobile phones and related subscription service commissions, hard drives, networking equipment and accessories. The entertainment software revenue category includes video gaming hardware and software, DVD movies,DVDs, CDs, digital downloads and computer software. The appliances revenue category includes major appliances as well as small electrics. The services revenue category consists primarily of commissions from the sale ofservice contracts, extended service contracts; revenue fromwarranties, computer-related services;services, product repair, revenue; and delivery and installation revenue derived fromfor home theater, mobile audio and appliances. The other revenue category includes non-core offerings such as snacks and beverages.

U.S. Best Buy Mobile offerings are in our home office revenue category. Revenue from U.S. Best Buy Mobile stand-alone stores is primarily derived from mobile phone hardware, subscription service commissions and associated mobile phone accessories.

Pacific Sales stores have offerings in three revenue categories: appliances, including plumbing, consumer electronics and services. Appliances consists of major appliances, evenly split between high endhigh-end and massmass-market premium brands. Plumbingbrands, and plumbing, which consists of kitchen and bath fixtures which includeincluding faucets, sinks, toilets and bath tubs. Consumer electronics consists of video and audio products, including televisions and home theater systems. The services revenue category consists primarily of repair services.

Magnolia Audio Video stores have offerings in threetwo revenue categories: consumer electronics home office and services. Consumer electronics consists of video and audio products. Video products include televisions, DVD players and accessories. Audio products include home theater audio systems and components, mobile electronics and accessories. The home office revenue category consists primarily of home theater furniture. The services revenue category consists primarily of home theater system installation and repair services as well as commissions from the sale ofservice contracts and extended service contracts.warranties.

International Segment

Canada The Carphone Warehouse and The Phone House stores in Europe have offerings in two revenue categories: home office and services. Home office consists primarily of mobile phones and related accessories as well as subscription service commissions. Services consists of device insurance operations, mobile and fixed-line telecommunication services, billing management services and Geek Squad repair services.

Best Buy Canada and Future Shop stores have offerings in five revenue categories: consumer electronics, home office, entertainment software, services and other, and for Future Shop only, a sixth revenue category, appliances. Consumer electronics consists of video and audio products. Video products include televisions, digital cameras and accessories, DVD players and digital camcorders and accessories. Audio products includeencompass MP3 players, home theater audio systems and components, navigation products, mobile electronics and accessories. The home office revenue category includes desktop and notebook computers and their respective accessories, monitors, hard drives, printers and mobile phones.phones and related accessories. The entertainment

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software revenue category includes video game hardware and software, DVDs, CDs and computer software. The appliances revenue category includes major appliances as well as small electrics. The services revenue category includes commissions from the sale of extended service contracts, extended warranties, repair, delivery, computercomputer-related services and home theater installation. The other revenue category includes non-core offerings.offerings such as snacks and beverages.

Although Canada Best Buy Canada and Future Shop stores offer similar revenue categories (except for appliances), there are differences in product brands and depth of selection within revenue categories. On average, approximately 35%29% of the product assortment (excluding entertainment software) overlaps between the two store brands.

China Best Buy China and Five Star stores have offerings in four revenue categories: appliances, consumer electronics,

home office and services. Our China stores do not carry entertainment software. Appliances includes major appliances, air conditioners, small electrics and housewares. The consumer electronics revenue category consists of video and audio products, including televisions, digital cameras, MP3 players and accessories. The home office revenue category includes desktop and notebook computers, mobile phones, traditional telephones and accessories. The services revenue category includes computer support services.

Our Best Buy Mexico store has offerings in six revenue categories: consumer electronics, home office, entertainment software, appliances, services and other, with products and offerings similar to our U.S. Best Buy stores.

Distribution

Domestic Segment

Generally, U.S. Best Buy stores' and U.S. Best Buy Mobile stand-alone stores' merchandise, except for major appliances and large-screen televisions, is shipped directly from manufacturers to our distribution centers located in California, Georgia, Indiana, Minnesota, New York, Ohio, Oklahoma and Virginia.throughout the U.S. Major appliances and large-screen televisions are shipped to satellite warehouses in each major market. U.S. Best Buy stores are dependent upon the distribution centers for inventory storage and shipment of most merchandise. However, in order to meet release dates for selected products and to improve inventory management, certain merchandise is shipped directly to our stores from manufacturers and distributors. All inventory is bar-coded and scanned to ensure accurate tracking. In addition, a computerized inventory replenishment program is used to manage inventory levels at each store. On average, U.S. Best Buy stores receive product shipments two or three times per week, with additional shipments during periods of high salesrevenue volume. Contract carriers ship merchandise from the distribution centers to stores. Generally, online merchandise sales are either picked up at U.S. Best Buy stores or fulfilled directly to customers through our distribution centers.

We receive and warehouse Pacific Sales stores' merchandise at atwo distribution centercenters in California. All inventory is bar-coded or marked with vendor serial numbers to ensure accurate tracking. In addition, a computerized inventory replenishment program is used to manage inventory levels at each store. Most merchandise is fulfilled directly to customers through our distribution center.centers.

We receive and warehouse Magnolia Audio Video stores' merchandise at either Magnolia Audio Video distribution centers in Washington and California or the U.S. Best Buy distribution center in California. All inventory is bar-coded and scanned to ensure accurate tracking.centers. Merchandise is delivered to stores an average of three times per week pursuant to an in-house distribution system.

International Segment

The Carphone Warehouse and The Phone House stores' merchandise is shipped directly from our suppliers to our distribution centers across Europe. Stores hold the immediate stock requirement and the distribution center in each market holds additional inventory. Our stores typically receive product shipments three to four times per week, with additional shipments during periods of high revenue volume.

Our Canada stores' merchandise is shipped directly from our suppliers to our distribution centers in British Columbia and Ontario. Our Canada stores are dependent upon the distribution centers for inventory storage and shipment of most merchandise. However, in order to meet release dates for selected products and to improve inventory management, certain merchandise is shipped directly to our stores from manufacturers and distributors. All inventory is bar-coded and scanned to ensure accurate tracking. In addition, a computerized inventory replenishment program is used to manage inventory levels at each store. Our Canada stores typically receive product shipments twice per week, with additional shipments during periods of high salesrevenue volume. Contract carriers ship merchandise from the distribution centers to stores.

We receive our Five Star stores' merchandise at more than 50 distribution centers and warehouses located throughout the Five Star retail chain, the largest of which is located in Nanjing, Jiangsu province.Province. Our Five Star stores are dependent upon the distribution centers for inventory storage and shipment of most merchandise. Most merchandise is fulfilled directly to customers through our distribution centers and warehouses.

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Our China Best Buy store'sChina stores' merchandise is shipped directly from our suppliers to our distribution center in Shanghai. Our China Best Buy store isChina stores are dependent upon the distribution center for inventory storage and shipment of most merchandise. However, in order to meet release dates for selected products and to improve inventory management, certain merchandise is shipped directly to our storestores from manufacturers and distributors. In certain circumstances, merchandise is shipped directly to our customers from manufacturers and distributors. Our China Best Buy storeChina stores typically receivesreceive product shipments three to four times per week, with additional shipments during periods of high salesrevenue volume.

Our Best Buy Mexico store has distribution methods similar to that of our U.S. Best Buy stores.

Suppliers

Our strategy depends, in part, upon our ability to offer customers a broad selection of name-brand products and, therefore, our success is dependent upon satisfactory and stable supplier relationships. In fiscal 2008,2009, our 20 largest suppliers accounted for just over 60%under half of the merchandise we purchased, with five suppliers — Sony, Hewlett-Packard, Samsung, Apple, and Toshiba — representing just over one-third28% of total merchandise purchased. The loss of or disruption in supply from any one of these major suppliers could have a material adverse effect on our revenue and earnings. We generally do not have long-term written contracts with our major suppliers that would require them to continue supplying us with merchandise. We have no indication that any of our suppliers plan to discontinue selling us merchandise. We have not experienced significant difficulty in maintaining satisfactory sources of supply, and we generally expect that adequate sources of supply will continue to exist for the types of merchandise we sell.

We operate a global sourcing officesoffice in China in order to purchase products directly from manufacturers in Asia. These offices haveThis office has improved our product sourcing efficiency and provideprovides us with the capability to offer private-label products that complement our existing product assortment. In the future, we expect purchases from our global sourcing officesoffice to increase as a percentage of total purchases. We also believe that the expected increase in our global sourcing volumes will help drive gross profit rate improvements by lowering our overall product cost. At March 1, 2008, we operated three of these offices, but subsequently closed our sourcing office in Beijing.

Store Development

The addition of new stores has played, and we believe will continue to play, a significant role in our growth and success. Our store development program has historically focused on entering new markets; adding stores within existing markets; and relocating, remodeling and expanding existing stores in order to offer new products and services to our customers. During fiscal 2008,2009, we opened 155285 new stores in addition to acquiring 2,414 Best Buy Europe stores, relocated nine34 stores and closed 1867 stores. We offer Geek Squad support services in all Best Buy stores. At March 1, 2008,February 28, 2009, we offered the Apple store-within-a-store experience in 357 U.S. Best Buy stores, the Magnolia Home Theater store-within-a-store experience in 346 U.S. Best Buy stores and the Best Buy Mobile store-within-a-store experience in 181all U.S. Best Buy stores as well as eight Best Buy Canada stores.

The following table reconciles U.S. Best Buy stores open at the beginning and end of each of the last five fiscal years:

The following table reconciles U.S. Best Buy Mobile stores open at the beginning and end of each of the last three fiscal years (the first Best Buy Mobile stand-alone store was opened in fiscal 2007):

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The following table reconciles Pacific Sales stores open at the beginning and end of each of the last twothree fiscal years:

(1)

As of the March 7, 2006, date of acquisition

The following table reconciles Magnolia Audio Video stores open at the beginning and end of each of the last five fiscal years:

The following table reconciles Best Buy Mobile stores open at the beginning and end of each of the last two fiscal years:

(1)

The Best Buy Mobile stand-alone store concept was test marketed in fiscal 2007.

The following table reconciles U.S. Geek Squad stores open at the beginning and end of each of the last five fiscal years:

The following table reconciles The Carphone Warehouse and The Phone House stores open at the beginning and end of the last fiscal year:

(1)

As of the June 28, 2008, date of acquisition

The following table reconciles Future Shop stores open at the beginning and end of each of the last five fiscal years:

The following table reconciles Canada Best Buy Canada stores open at the beginning and end of each of the last five fiscal years:

The following table reconciles Best Buy Mobile Canada stores open at the beginning and end of the last fiscal year (the first Best Buy Mobile Canada store was opened in fiscal 2009):

The following table reconciles Five Star stores open at the beginning and end of each of the last twothree fiscal years:

(1)

As of the June 8, 2006, the date of acquisition

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The following table reconciles the China Best Buy storeChina stores open at the beginning and end of each of the last twothree fiscal years:years (the first Best Buy China store was opened in fiscal 2007):

The following table reconciles the Best Buy Mexico store open at the beginning and end of the fiscal year (the first Best Buy Mexico store was opened in fiscal 2009):

During fiscal 2009,2010, we expect to open approximately 14065 net new stores in the U.S., Europe, Canada, China, Mexico and Mexico.Turkey. Most of the new stores will be opened in markets where we already have stores, leveraging our infrastructure and making shopping more convenient for our customers. In the U.S., we anticipate opening 8540 to 10050 new Best Buy stores, as well as relocating four existing Best Buy stores. We also expect to open five to ten Pacific Sales stores in western states. Additionally, we are extending our Best Buy Mobile experience to the majority of our U.S. Best Buy stores in the next 18 months. We will also look to improve the customer experience in the computing space by expanding our collaborative relationships with Dell, Hewlett-Packard and Toshiba, as well as adding Apple products and services to approximately 250 more U.S. Best Buy stores. In Canada, we expect to open approximately sixthree Future Shop stores and sixfour Best Buy stores, as well asstores. In Europe, we expect to open and close one Future Shop storeapproximately the same number of The Carphone Warehouse and relocate six existing Future ShopThe Phone House stores. In China, we plan to open 20 to 2512 Five Star stores and close five Five Star stores. We also expect to open one additional Best Buy store in China and five to eight additional Best Buy stores in ChinaMexico in fiscal 2009.2010. Finally, we anticipate extending our international presence by opening our first two to five storesstore in MexicoTurkey in the second half of fiscal 2009 and our first one or two stores in Turkey in the early part of fiscal 2010.

Additional information regarding our outlook for fiscal 2009 is included in theOutlook for Fiscal 2009 section of Item 7,Management's Discussion and Analysis of

Financial Condition and Results of Operations, of this Annual Report on Form 10-K.

Intellectual Property

We believe we own and have the rights to use valuable intellectual property including trademarks, service marks and tradenames, some of which are of material importance to our business, and includesuch as "Best Buy," the "Yellow Tag" logo, "Best Buy Mobile," "The Carphone Warehouse," "Dynex," "Five Star," "Future Shop," "Geek Squad," "Insignia," "Magnolia Audio Video," "Napster," "Pacific Sales," "Rocketfish""The Phone House," "Rocketfish," "Speakeasy" and "Speakeasy."the "Yellow Tag" logo. Some of our intellectual property is the subject of numerous U.S. and foreign trademark and service mark registrations. Our trademark and service mark registrations in the U.S. generally have 10 year10-year renewable terms. We believe our intellectual property has significant value and is an important factor in the marketing of our company, our stores and our Web sites. We also believe we own valuable intellectual property for which we have patents pending. We are not aware of any facts that could negatively impact our continuing use of any of our intellectual property.

In accordance with accounting principles generally accepted in the United StatesU.S. ("GAAP"), our balance sheets include the cost of acquired intellectual property only.property. The only material acquired intellectual properties presently included in our consolidated balance sheets are the tradenames The Carphone Warehouse, Five Star, Future Shop, Five Star,Napster, Pacific Sales, The Phone House and Speakeasy, tradenames, which collectively had a total carrying value of $97$173 million at the end of fiscal 2008.2009. The values of these tradenames are based on the continuation of the Future Shop, Five Star, Pacific Sales and Speakeasy brands. We currently classify these tradenames as indefinite-lived intangible assets.assets, except for The Carphone Warehouse and The Phone House brands, which have definite lives. If we were to abandon any of our brands or if the Future Shop, Five Star, Pacific Sales or Speakeasy brand,expected cash flows associated with these brands were to materially decrease, we wouldcould incur an impairment charge based on the then-carrying value of the associated tradename.

Seasonality

Our business, like that of many U.S. retailers, is seasonal. Historically, we have realized more of our revenue and earnings in the fiscal fourth quarter, which includes the majority of the holiday shopping season in the U.S., Europe and Canada, than in any other fiscal quarter.

Working Capital

We fund our business operations through a combination of available cash and cash equivalents, short-term investments and cash flows generated from operations. In addition, our revolving credit facilities are available for additional working capital needs or investment opportunities.

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Customers

We do not have a significant concentration of sales with any individual customer and, therefore, the loss of any one customer would not have a material impact on our business. No single customer has accounted for 10% or more of our total revenue.

Backlog

Our stores, call centers and online shopping sites do not have a material amount of backlog orders.

Government Contracts

No material portion of our business is subject to renegotiation of profits or termination of contracts or subcontracts at the election of any government or government agencies or affiliates.

Competition

Our stores compete against other consumer electronics retailers, specialty home office retailers, mass merchants, online retailers, home-improvement superstores and a number of direct-to-consumer alternatives. Our stores also compete against independent dealers, regional chain discount stores, wholesale clubs, video rental storesmobile phone service carriers and other specialty retail stores. Mass merchants continue to increase their assortment of consumer electronics products, primarily those that are less complex to sell, install and operate, and have been expanding their product offerings into higher-end categories. Similarly, large home-improvement retailers are expanding their assortment of appliances. In addition, consumers are increasingly downloading music, entertainment and computer software directly via the Internet.

We compete principally on the basis of customer service; installation and support services; store environment, location and convenience; product assortment and availability; value pricing; and financing alternatives.

We believe our store experience, broad product assortment, store formats and brand marketing strategies differentiate us from most competitors by positioning our stores as the preferred destination for new technology and

entertainment products in a fun and informative shopping environment. Our stores compete by aggressively advertising and emphasizing a complete product and service solution, value pricing and financing alternatives. In addition, our trained and knowledgeable sales and service staffs allow us to tailor the offerings to meet the needs of our customers.

Research and Development

We have not engaged in any material research and development activities during the past three fiscal years.

Environmental Matters

We are not aware of any federal, state or local provisions which have been enacted or adopted regulating the discharge of materials into the environment, or otherwise relating to the protection of the environment, that have materially affected, or will materially affect, our net earnings or competitive position, or have resulted or will result in material capital expenditures. During fiscal 2008,2009, we had no material capital expenditures for environmental control facilities and no such material expenditures are anticipated in the foreseeable future.

Number of Employees

At the end of fiscal 2008,2009, we employed approximately 150,000155,000 full-time, part-time and seasonal employees worldwide. We consider our employee relations to be good. In the U.S., we offer our employees a wide array of company-paid benefits. Webenefits, which we believe our benefits are competitive relative to others in our industry. In our operations outside the U.S., we have certainoffer benefits that may vary from those offered to our U.S. employees based ondue to customary local practices and statutory requirements.

Financial Information About Geographic Areas

We operate two reportable segments: Domestic and International. Financial information regarding the Domestic and International geographic areas is included in Item 7,Management's Discussion and Analysis of Financial Condition and Results of Operations, and Note 9,11,Segment and Geographic Information, of the Notes to Consolidated Financial Statements, included in Item 8,Financial Statements and Supplementary Data, of this Annual Report on Form 10-K.

Available Information

We are subject to the reporting requirements of the Exchange Act and its rules and regulations. The Exchange Act requires us to file reports, proxy statements and other information with the U.S. Securities and Exchange Commission ("SEC"). Copies of these reports, proxy

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statements and other information can be read and copied at:

SEC Public Reference Room
100 F Street N.E.
Washington, D.C. 20549

Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330.

The SEC maintains a Web site that contains reports, proxy statements and other information regarding issuers that file electronically with the SEC. These materials may be obtained electronically by accessing the SEC's Web site athttp://www.sec.gov.

We make available, free of charge on our Web site, our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after we electronically file these documents with, or furnish them to, the SEC. These documents are posted on our Web site atwww.BestBuy.com — select the "For Our Investors" link and then the "SEC Filings" link.

We also make available, free of charge on our Web site, the charters of the Audit Committee, the Compensation and Human Resources Committee, the Finance and Investment Policy Committee and the Nominating, Corporate Governance and Public Policy Committee, as well as the Corporate Governance Principles of our Board of Directors ("Board") and our Code of Business Ethics (including any amendment to, or waiver from, a provision of our Code of Business Ethics) adopted by our Board.Board, as well as the charters of the Board's Audit Committee, Compensation and Human Resources Committee, Finance and Investment Policy Committee and Nominating, Corporate Governance and Public Policy Committee. These documents are posted on our Web site atwww.BestBuy.com — select the "For Our Investors" link and then the "Corporate Governance" link.

Copies of any of the above-referenced documents will also be made available, free of charge, upon written request to:

Best Buy Co., Inc.
Investor Relations Department
7601 Penn Avenue South
Richfield, MN 55423-3645

Item 1A. Risk Factors.

Described below are certain risks that our management believes are applicable to our business and the industry in which we operate. There may be additional risks that are not presently material or known. You should carefully consider each of the following risks and all other information set forth in this Annual Report on Form 10-K.

If any of the events described below occur, our business, financial condition, results of operations, liquidity or access to the capital markets could be materially adversely affected. The following risks could cause our actual results to differ materially from our historical experience and from results predicted by forward-looking statements made by us or on our behalf related to conditions or events that we anticipate may occur in the future. The following risks should not be construed as an exhaustive list of all factors that could cause actual results to differ materially from those expressed in forward-looking statements made by us or on our behalf. All forward-looking statements made by us or on our behalf are qualified by the risks described below.

Economic conditions in the U.S. and key international markets, a decline in consumer discretionary spending or other conditions may materially adversely impact our operating results.

We sell products and services that consumers may view as discretionary items rather than necessities. As a result, our results of operations tend to be more sensitive to changes in macro-economic conditions that impact consumer spending, including discretionary spending. Challenging macro-economic conditions also impact our customers' ability to obtain consumer credit in a timely manner, if at all. Other factors, including consumer confidence, employment levels, interest rates, tax rates, consumer debt levels, and fuel and energy costs could reduce consumer spending or change consumer purchasing habits. In the past fiscal year, many of these factors adversely affected consumer spending and, consequently, our business and results of operations. A continued slowdown in the U.S. or global economy, or an uncertain economic outlook, could materially adversely affect consumer spending habits and our operating results in the future.

The domestic and international political situation also affects consumer confidence. The threat or outbreak of domestic or international terrorism or other hostilities could lead to a decrease in consumer spending. Any of these

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events and factors could cause a decrease in revenue or an increase in inventory markdowns or certain operating expenses, which could materially adversely affect our results of operations.

If we do not anticipate and respond to changing consumer preferences in a timely manner, our operating results could materially suffer.

Our business depends, in large part, on our ability to successfully introduce successfully new products, services and technologies to consumers, the frequency of such introductions, the level of consumer acceptance, and the related impact on the demand for existing products, services and technologies. Failure to accurately predict accurately constantly changing consumer tastes, preferences, spending patterns and other lifestyle decisions, or to effectively address effectively consumer concerns, could have a material adverse effect on our revenue, results of operations and standing with our customers.

Our growth is dependent on the success of our strategies.

Our growth is dependent on our ability to identify, develop and execute strategies. While we believe customer centricity and the pursuit of international growth opportunities will enable us to grow our business, misjudgments could have a material adverse effect on our business, financial condition and results of operations.

Our results of operations could materially deteriorate if we fail to attract, develop and retain qualified employees.

Our performance is dependent on attracting and retaining a largequalified employees who are able to meet the wants and growing numberneeds of employees.our customers. We believe our competitive advantage is providing unique end-to-end solutions for each individual customer, which requires us to have highly trained and engaged employees. Our success depends in part upon our ability to attract, develop and retain a sufficient number of qualified employees, including store, service and administrative personnel. The turnover rate in the retail industry is high, and qualified individuals of the requisite caliber and number needed to fill these positions may be in short supply in some areas. Competition for such qualified individuals could require us to pay higher wages to attract a sufficient number of employees. Our inability to recruit a sufficient number of qualified individuals in the future may delay planned openings of new stores or affect the speed with which we expand initiatives such as Best Buy Mobile, services and our international operations. Delayed store openings, significant increases in employee turnover rates or significant increases in labor costs could have a material adverse effect on our business, financial condition and results of operations.

We face strong competition from traditional store-based retailers, Internet businesses and other forms of retail commerce, which could materially adversely affect our revenue and profitability.

The retail business is highly competitive. We compete for customers, employees, locations, products and other important aspects of our business with many other local, regional, national and international retailers. Pressure from our competitors, some of which have a greater market presence and financial resources than we do, could require us to reduce our prices or increase our costs of doing business. As a result of this competition, we may experience lower revenue and/or higher operating costs, which could materially adversely affect our results of operations.

General economic conditions,The failure to control our costs and reduce our expense structure could have a decline in consumer discretionary spending or other conditions may materially adverselymaterial adverse impact on our sales in a disproportionate fashion.profitability.

We sell productsCustomer traffic within our stores and services that consumers tendoverall consumer spending have decreased in the past fiscal year, driven by turmoil in the financial markets and other macro-economic factors, which makes it more challenging for us to view as conveniences rather than necessities.maintain or grow our operating income rates. As a result, we must continue to reduce our expense structure to more competitive levels. Any unplanned increases in our labor and benefit rates, advertising and marketing expenses, other store expenses or indirect spending could delay or prevent us from achieving increased profitability or otherwise have a material adverse impact on our results of operations.

Our liquidity may be materially adversely affected by the financial crisis in the U.S. and key international markets.

We must have sufficient sources of liquidity to fund our working capital requirements, pay operating expenses, service our outstanding indebtedness and finance investment opportunities. Without sufficient liquidity, we could be forced to curtail our operations or we may not be able to pursue promising business opportunities. The principal sources of our liquidity are more sensitive to changes in general economic conditions that impact consumer spending, including discretionary spending. Future economic conditionsfunds generated from operating activities, available cash and cash equivalents, and borrowings under credit facilities and other debt financings.

As widely reported, global financial markets have been experiencing extreme disruption in recent months,

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including, among other things, severely diminished liquidity, constrained credit availability and extreme volatility in securities prices. These market conditions affected, to a degree, our ability to borrow committed portions of our $2.5 billion five-year unsecured revolving credit agreement with JPMorgan Chase Bank, N.A., as administrative agent, and a syndication of banks ("Credit Agreement"). Lehman Commercial Paper Inc. ("Lehman CPI"), a subsidiary of Lehman Brothers Holdings Inc., which filed a petition under Chapter 11 of the U.S. Bankruptcy Code in September 2008, provided a commitment of $180 million under the Credit Agreement. Since September 2008, Lehman CPI has declined requests for funding under the Credit Agreement and no other lender assumed Lehman CPI's obligation to fund. We cannot be certain whether another lender might assume Lehman CPI's commitment or whether one or more other syndicate lenders under the Credit Agreement might also seek bankruptcy protection or otherwise fail to satisfy their financing obligations under the Credit Agreement.

If our sources of liquidity do not satisfy our requirements, we may have to seek additional financing. The availability of financing will depend on a variety of factors, including consumer confidence, employment levels, interest rates, tax rates, consumer debt levels, fuelsuch as economic and energy costs andmarket conditions, the availability of consumer credit and our credit ratings, as well as the possibility that lenders could reduce consumer spendingdevelop a negative perception of us or change consumer purchasing habits. A general slowdownthe retail industry generally. If required, we may not be able to obtain additional financing ,on favorable terms, or at all.

Changes in our credit ratings may limit our access to capital markets and materially increase our borrowing costs.

In fiscal 2009, Moody's Investors Service, Inc. maintained its rating and outlook of our debt securities while Fitch Ratings Ltd. reaffirmed its rating of our debt securities as BBB+ but assigned a negative outlook and Standard & Poor's Ratings Services announced that it had downgraded the rating of our debt securities to BBB- with a stable outlook.

Future downgrades to our long-term credit ratings and outlook could negatively impact our access to the capital markets and the perception of us by lenders and other third parties. Our credit ratings are based upon information furnished by us or obtained by a rating agency from its own sources and is subject to revision, suspension or withdrawal by the rating agency at any time. Rating agencies may review the ratings assigned to us due to developments that are beyond our control.

Any further downgrade to our debt securities will result in higher interest costs for certain of our credit facilities and other debt financings, and could result in higher interest costs on future financings. Further, in the U.S. economyevent of such a downgrade, we may not be able to successfully obtain additional financing, if necessary, on favorable terms, or inat all.

Our growth is dependent on the global economy, or an uncertain economic outlook, could materially adversely affect consumer spending habitssuccess of our strategies.

Our growth is dependent on our ability to identify, develop and our operating results.

The domestic and international political situation also affects consumer confidence. The outcomes of political racesexecute strategies. While we believe customer centricity and the threat or outbreakpursuit of terrorism or other hostilitiesinternational growth opportunities will enable us to grow our business, misjudgments could lead tohave a decrease in consumer spending. Any of these eventsmaterial adverse effect on our business, financial condition and factors could cause a decrease in revenue or an increase in inventory markdowns or certain operating expenses, which could materially adversely affect our results of operations.

Our growth strategy includes expanding our business by opening stores both in existing markets and by opening stores in new markets.

Our future growth is dependent, in part, on our ability to build, buy or lease new stores. We compete with other retailers and businesses for suitable locations for our stores. Local land use, local zoning issues, environmental regulations and other regulations applicable to the types of stores we desire to construct may impact our ability to find suitable locations, and also influence the cost of building, buying and leasing our stores. We also may have difficulty negotiating real estate purchase agreements and leases on acceptable terms. Failure to manage effectively these and other similar factors will affect our ability to build, buy and lease new stores, which may have a material adverse effect on our future profitability.

We seek to expand our business in existing markets in order to attain a greater overall market share. Because our stores typically draw customers from their local areas, a new store may draw customers away from our nearby existing stores and may cause customer traffic and comparable store sales performance to decline at those existing stores.

We also intend to open stores in new markets. The risks associated with entering a new market include difficulties in attracting customers due towhere there is a lack of customer familiarity with our brand,brands, our lack of familiarity with local customer preferences, seasonal differences in the market

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and our ability to obtain the necessary governmental approvals. In addition, entry into new markets may bring us into competition with new competitors or with existing competitors with a large, established market presence. We cannot ensure that our new stores will be profitably deployed; asdeployed. As a result, our future profitability may be materially adversely affected.

Failure in our pursuit or execution of new business ventures, strategic alliances and acquisitions could have a material adverse impact on our business.

Our growth strategy includes expansion via new business ventures, strategic alliances and acquisitions. Assessing a potential growth opportunity involves extensive due diligence. However, the amount of information we can obtain about a potential growth opportunity may be limited, and we can give no assurance that new business ventures, strategic alliances and acquisitions will positively affect our financial performance or will perform as planned. Integrating new businesses, stores and concepts can be a difficult task. Cultural differences in some markets into which we expand or into which we introduce new retail concepts may result in customers in those markets being less receptive than originally anticipated. These types of transactions may divert our capital and our management's attention from other business issues and opportunities. We may not be able to successfully assimilate or integrate companies that we acquire, including their personnel, financial systems, distribution, operations and general operating procedures. We may also encounter challenges in achieving appropriate internal control over financial reporting in connection with the integration of an acquired company. If we fail to assimilate or integrate acquired companies successfully, our business and operating results could suffer materially.

Failure to protect the integrity and security of our customers' information could expose us to litigation and materially damage our standing with our customers.

The use of individually identifiable data by our business and our business associates is regulated at the state, federal and international levels. Increasing costs associated with information security — such as increased investment in technology, the costs of compliance with consumer protection laws and costs resulting from consumer fraud — could cause our business and results of operations to suffer materially. Additionally, the success of our online operations depends upon the secure transmission of confidential information over public networks, including the use of cashless payments. While we have taken significant steps to protect customer and confidential information, there can be no assurance that advances in computer capabilities, new discoveries in the field of cryptography or other developments will prevent the compromise of our customer transaction processing capabilities and personal data. If any such compromise of our security were to occur, it could have a material adverse effect on our reputation, operating results and financial condition. Any such compromise may materially increase the costs we incur to protect against such information security breaches and could subject us to additional legal risk.

Risks associated with the vendors from whom our products are sourced could materially adversely affect our revenue and gross profit.

The products we sell are sourced from a wide variety of domestic and international vendors. Global sourcing has becomeis an increasingly important part of our business and positively affects our financial performance. Our 20 largest suppliers account for just over 60%under half of the merchandise we purchase. If any of our key vendors fails to supply us with products or continue to develop new technologies, we may not be able to meet the demands of our customers and our revenue could materially decline. We require all of our vendors to comply with applicable laws, including labor and environmental laws, and otherwise be certified as meeting our required vendor standards of conduct. Our ability to find qualified vendors who meet our standards and supply products in a timely and efficient manner is a significant challenge, especially with respect to goods sourced from outside the U.S. Political or financial instability, merchandise quality issues, product safety concerns, trade restrictions, work stoppages, tariffs, foreign currency exchange rates, transportation capacity and costs, inflation, outbreak of pandemics and other factors relating to foreign trade are beyond our control. These and other issues affecting our vendors could materially adversely affect our revenue and gross profit.

We are subject to certain regulatory and legal developments which could have a material adverse impact on our business.

Our regulatory and legal environment exposes us to complex compliance and litigation risks that could

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materially adversely affect our operations and financial results. The most significant compliance and litigation risks we face are:

•

The difficulty in complying with sometimes conflicting regulations in local, national or international jurisdictions and new or changing regulations that affect how we operate;



•

The impact of changes in tax laws (or interpretations thereof) and accounting standards; and



•

The impact of litigation trends, including class action lawsuits involving consumers and shareholders, and labor and employment matters.

Defending against lawsuits and other proceedings may involve significant expense and divert management's attention and resources from other matters.

Changes to the National Labor Relations Act could have a material adverse impact on our business.

The Employee Free Choice Act ("EFCA") is pending before the U.S. Congress. The EFCA, also referred to as the "card check" bill, if passed in its current or similar form, could significantly change the nature of labor relations in the U.S. Specifically, it would impact how union elections and contract negotiations are conducted. The pending or similar legislation could make it easier for unions to be formed, and employers of newly unionized employees may face mandatory, binding arbitration of labor scheduling, costs and standards, which could increase the costs of doing business.

At February 28, 2009, we had 1,107 stores operating in the U.S. None of the employees in those stores were represented by labor unions or worked under collective bargaining agreements. Passage of the pending or similar legislation could materially adversely affect our results of operations.

Regulatory developments in the U.S. could impact our private-label credit card financing offers and have a material adverse impact on our revenue and profitability.

We offer private-label credit cards in the U.S. through third-party financial institutions that manage and directly extend credit to our customers. Cardholders who choose the private-label card can receive low- or no-interest promotional financing on qualifying purchases. If a customer utilizes a deferred interest financing offer and fails to comply with the terms of the offer, all deferred interest becomes due and payable to the third-party financial institution. Private label credit card sales accounted for 18%, 16% and 17% of our Domestic segment's revenue in fiscal 2009, 2008 and 2007, respectively.

In December 2008, the Federal Reserve issued a wide range of new regulations intended to improve the disclosures that consumers receive in connection with credit card accounts and other revolving credit plans. These new provisions, effective July 1, 2010, could limit the ability of card issuers to charge interest to customers who utilize deferred interest financing offers but do not comply with the terms of the offer. Pending the Federal Reserve's issuance of its final ruling, there can be no assurance that some of our deferred interest financing offers on our private-label credit card will continue to be available in their existing form. If we are unable to continue to make low- or no-interest financing offers, our revenue and profitability may be materially adversely affected.

Our International activities subject us to risks associated with the legislative, judicial, accounting, regulatory, political and economic conditions specific to the countries or regions in which we operate, which could materially adversely affect our financial performance.

We have a presence in various foreign countries including Belgium, Bermuda, Canada, China, France, Germany, Ireland, Luxembourg, Mexico, the Republic of Mauritius, the Netherlands, Portugal, Spain, Sweden, Turkey, Turks and Caicos, and the United Kingdom. During fiscal 2008,2009, our International segment's operations generated 17%22% of our revenue. Our growth strategy includes expansion into new or existing international markets, and we expect that our International segment's operations will account for a larger portion of our revenue in the future. Our future operating results in these countries and in other countries or regions throughout the world where we may operate in the future could be materially adversely affected by a variety of factors, many of which are beyond our control including political conditions, economic conditions, legal and regulatory constraints and foreign currency regulations.

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In addition, foreign currency exchange rates and fluctuations may have an impact on our future costs or on future cash flows from our International segment's operations, and could materially adversely affect our financial performance. Moreover, the economies of some of the countries in which we have operations have in the past suffered from high rates of inflation and currency devaluations, which, if they occurredwere to occur again, could materially adversely affect our financial performance. Other factors which may materially adversely impact our International segment's operations include foreign trade, monetary, tax and fiscal policies both of the U.S. and of other countries; laws, regulations and other activities of foreign governments, agencies and similar organizations; and maintaining facilities in countries which have historically been less stable than the U.S..U.S.

Additional risks inherent in our International segment's operations generally include, among others, the costs and difficulties of managing international operations, adverse tax consequences and greater difficulty in enforcing intellectual property rights in countries other than the U.S..U.S. The various risks inherent in doing business in the U.S. generally also exist when doing business outside of the U.S., and may be exaggerated by the difficulty of doing business in numerous sovereign jurisdictions due to differences in culture, laws and regulations.

We rely heavily on our management information systems for inventory management, distribution and other functions. If our systems fail to perform these functions adequately or if we experience an interruption in their operation, our business and results of operations could be materially adversely affected.

The efficient operation of our business is dependent on our management information systems. We rely heavily on our management information systems to manage our order entry, order fulfillment, pricing, point-of-sale and inventory replenishment processes. The failure of our management information systems to perform as we anticipate could disrupt our business and could result in decreased revenue, increased overhead costs and excess or out-of-stock inventory levels, causing our business and results of operations to suffer materially.

A disruption in our relationship with Accenture, who manageshelps us manage our information technology and human resources operations and conducts certain procurement activities, could materially adversely affect our business and results of operations.

We have engaged Accenture LLP ("Accenture"), a global management consulting, technology services and outsourcing company, to manage significant portions of our information technology and human resources operations as well as to conduct certain procurement

activities. We rely heavily on our management information systems for inventory management, distribution and other functions. We also rely heavily on human resources support to attract, develop and retain a sufficient number of qualified employees. We also use Accenture to provide procurement support to research and to purchase certain non-merchandise products and services. Any disruption in our relationship with Accenture could result in decreased revenue and increased overhead costs, causing our business and results of operations to suffer materially.

FailureWe have various commercial insurance agreements and sell extended warranties to protectcustomers on behalf of a subsidiary of AIG, whose parent company has experienced and continues to experience financial difficulties.

We have various commercial insurance relationships with AIG Commercial Insurance Group, Inc. ("AIG CI"), a subsidiary of American International Group, Inc. ("AIG"), including workers' compensation, directors and officers, commercial property, general liability and other insurance policies. We also sell extended warranties on behalf of AIG CI. Commissions received from AIG CI from the integritysale of extended warranties represented 2.0%, 2.1% and security2.2% of our customers' information could expose usrevenue in fiscal 2009, 2008 and 2007, respectively. At February 28, 2009 and March 1, 2008, claims receivable from AIG CI were $35 million and $28 million, respectively.

Although AIG has advised that its commercial insurance subsidiaries remain well-capitalized and they have sufficient reserves and liquidity to litigationpay claims despite the parent company's recent issues and materially damage our standing with our customers.

The use of individually identifiable data by our business and our business associates is regulated at the state, federal and international levels. Increasing costs associated with information security — such as increased investment in technology, the costs of compliance with consumer protection laws and costs resulting from consumer fraud — could cause our business and results of operations to suffer materially. Additionally, the success of our online operations depends upon the secure transmission of confidential information over public networks, including the use of cashless payments. While we are taking significant steps to protect customer and confidential information, there can be no assurance that advances in computer capabilities, new discoveries in the field of cryptography or other developments will prevent the compromise of our customer transaction processing capabilities and personal data. If any such compromise of our security were to occur, it could have a material adverse effect on our reputation, operating results anddiminished financial condition. Any such compromise may materially increase the costs we incur to protect against such information security breaches and could subject us to additional legal risk.

Failure in our pursuit or execution of new business ventures, strategic alliances and acquisitions could have a material adverse impact on our business.

Our growth strategy includes expansion via new business ventures, strategic alliances and acquisitions. Assessing a potential growth opportunity involves extensive due diligence. However, the amount of information we can obtain about a potential growth opportunity may be limited, andposition, we can give no assurance that new business ventures, strategic alliances and acquisitionsAIG CI or applicable regulatory authorities will positively affect our financial performance or will perform as planned. Integrating new stores and concepts can be a difficult task. Cultural differences in some markets into which we expand or into which we introduce new retail concepts may result in customers in those markets being less receptive than originally anticipated. These types of transactions may divert our capital and our management's attention from other business issues and opportunities. We may not be able to successfully assimilatefulfill the insurer's obligations under our existing insurance policies or integrate companies thaton our customers' outstanding product warranties in the

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event of a failure of AIG CI. Further, in the event of a failure of AIG CI, we acquire, including their personnel, financial systems, distribution,could be required to replace our existing insurance policies and seek a new provider of extended warranties, which may be difficult to do in a timely manner or on substantially similar terms as our existing agreements with AIG CI. Failure to do so could materially adversely affect our results of operations and general operating procedures. We may also encounter challenges in achieving appropriate internal control over financial reporting in connection with the integration of an acquired company. If we fail to assimilate or integrate acquired companies successfully, our business and operating results could suffer materially.condition, as well as damage customer relationships.

We are highly dependent on the cash flows and net earnings we generate during our fourth fiscal quarter, which includes the majority of the holiday selling season.

Approximately one-third of our revenue and more than one-half of our net earnings are generated in our fourth fiscal quarter, which includes the majority of the holiday shopping season in the U.S., Europe and Canada. Unexpected events or developments such as natural or man-made disasters, product sourcing issues or adverse economic conditions in our fourth quarter could have a material adverse effect on our revenue and earnings.

The foregoing should not be construed as an exhaustive listresults of all factors that could cause actual results to differ materially from those expressed in forward-looking statements made by us or on our behalf.operations.

Item 1B. Unresolved Staff Comments.

Not applicable.

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Item 2. Properties.

Stores, Distribution Centers and Corporate Facilities

Domestic Segment

The following table summarizes the geographic location of our Domestic segment stores at the end of fiscal 2008:2009:

(1)

Store counts have been adjusted to reflect Best Buy Mobile stand-alone stores test marketed in New York in fiscal 2007.

		U.S. Best Buy Stores			U.S. Best Buy Mobile Stores			Pacific Sales Stores			Magnolia Audio Video Stores			U.S. Geek Squad Stores
Alabama			14			—			—			—			—
Alaska			1			—			—			—			—
Arizona			27			—			2			—			—
Arkansas			8			—			—			—			—
California			117			—			31			4			2
Colorado			22			—			—			—			1
Connecticut			12			3			—			—			—
Delaware			4			—			—			—			—
District of Columbia			2			—			—			—			—
Florida			62			—			—			—			—
Georgia			30			4			—			—			1
Hawaii			2			—			—			—			—
Idaho			5			—			—			—			—
Illinois			57			2			—			—			—
Indiana			20			1			—			—			—
Iowa			13			—			—			—			—
Kansas			8			—			—			—			—
Kentucky			9			—			—			—			—
Louisiana			13			—			—			—			—
Maine			6			—			—			—			—
Maryland			22			5			—			—			—
Massachusetts			27			—			—			—			—
Michigan			32			—			—			—			—
Minnesota			27			1			—			—			2
Mississippi			7			—			—			—			—
Missouri			21			—			—			—			—
Montana			3			—			—			—			—
Nebraska			6			—			—			—			—
Nevada			10			—			1			—			—
New Hampshire			6			—			—			—			—
New Jersey			23			2			—			—			—
New Mexico			5			—			—			—			—
New York			46			4			—			—			—
North Carolina			32			6			—			—			—
North Dakota			4			—			—			—			—
Ohio			38			—			—			—			—
Oklahoma			11			—			—			—			—
Oregon			10			—			—			—			—
Pennsylvania			33			5			—			—			—
Puerto Rico			4			—			—			—			—
Rhode Island			2			—			—			—			—
South Carolina			14			4			—			—			—
South Dakota			2			—			—			—			—
Tennessee			15			—			—			—			—
Texas			101			—			—			—			—
Utah			9			—			—			—			—
Vermont			1			—			—			—			—
Virginia			34			1			—			—			—
Washington			20			—			—			2			—
West Virginia			3			—			—			—			—
Wisconsin			23			—			—			—			—
Total			1,023			38			34			6			6

Note: At the end of fiscal 2008,2009, we owned 24 of our U.S. Best Buy locations. Also at the end of fiscal 2008, westore locations and operated 3234 U.S. Best Buy stores withfor which we owned improvements onthe building and leased the land. All other stores in the Domestic segment at the end of fiscal 20082009 were leased.

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At the end of fiscal 2008,2009, we operated 9231,023 U.S. Best Buy stores, 19 Pacific Sales stores, 13 Magnolia Audio Video stores, nine38 U.S. Best Buy Mobile stand-alone stores, 34 Pacific Sales stores, six Magnolia Audio Video stores, and sevensix Geek Squad stand-alone stores, totaling approximately 37.540.9 million retail square feet.

We have 22 distribution centers throughout the U.S. to service theour Domestic segment operations, of the Domestic segment primarily with the following distribution centers:

We also leasewhich approximately 3.07.0 million square feet of space in 13 satellite warehouses in metropolitan markets for home delivery of major appliancesare leased and large-screen televisions. approximately 3.2 million square feet are owned.

We also lease approximately 0.2 million square feet of space in Louisville, Kentucky, that is used by our Geek Squad operations to service notebook and desktop computers.

Our principal corporate office is located in Richfield, Minnesota, and is an owned facility consisting of four interconnected buildings totaling approximately 1.5 million square feet. Accenture, who manages our information technology and human resources operations and conducts certain procurement activities for us, and certain other of our vendors who provide us with a variety of additional corporate services, occupy a portion of our principal corporate office. We also lease an aggregate of approximately 0.1 million square feet of corporate office space in California for both our Pacific Sales and Napster operations and in Washington for both our Magnolia Audio Video and Speakeasy operations.

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International Segment

The following table summarizes the geographic location of our International segment stores at the end of fiscal 2008:2009:

Note: At the end of fiscal 2008,2009, we owned none of The Carphone Warehouse and two of The Phone House store locations, three of our Canada Best Buy stores,Canada store locations, six of our Five Star storesstore locations and one of our China Best Buy store.China store locations. All other stores in the International segment at the end of fiscal 20082009 were leased.

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At the end of fiscal 2008,2009, we operated 131897 The Carphone Warehouse stores, 1,568 The Phone House stores, 58 Best Buy Canada stores, three Best Buy Mobile Canada stores, 139 Future Shop stores, 51 Canadafive Best Buy China stores, 160164 Five Star stores and one China Best Buy Mexico store totaling approximately 11.113.3 million retail square feet.

We lease approximately 0.8 million square feet of distribution center space throughout nine European countries to service our Europe operations.

We lease approximately 1.1 million square feet of distribution center space in Brampton, Ontario, and approximately 0.4 million square feet of distribution center space in Vancouver, British Columbia, to service our Canada operations.

We also lease approximately 1.0 million square feet of distribution center space in Jiangsu province,Province and an additional approximately 0.6 million square feet of distribution center space throughout the Five Star retail chain to support our Five Star distribution network.network in China. We lease less thanapproximately 0.1 million square feet of distribution center space in Shanghai to service our Best Buy China operations.

We lease approximately 34,000 square feet of distribution center space in Estado de Mexico, Mexico, to support our Best Buy Mexico store.

The principal office for our Best Buy Europe operations is located in a 156,000-square-foot leased facility in Acton, West London. The principal office for our Canada operations is located in a 141,000-square-foot leased facility in Burnaby, British Columbia. The principal office for our Five Star operations is located in a 46,000-square-foot owned facility in Nanjing, Jiangsu. The principal office for our China Best Buy China operations is located in a 27,000-square-foot leased facility in Shanghai. The principal office for Best Buy Mexico is located in a 20,000-square-foot leased facility in Mexico City, Mexico. In addition, our International operationswe lease a 4,000-square foot4,000-square-foot facility in Vancouver, British Columbia.Columbia to support our International segment operations.

Global SourcingPART II

In support
29Item 5.Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of our global sourcing initiative, we lease office space in China totaling approximately 45,000 square feet at the endEquity Securities.29Item 6.Selected Financial Data.32Item 7.Management's Discussion and Analysis of fiscal 2008.

Operating Leases

Almost allFinancial Condition and Results of our storesOperations.34Item 7A.Quantitative and a majority of our distribution facilities are leased. Terms of the lease agreements generally range from 10 to 20 years. Most of the leases contain renewal options and rent escalation clauses.

Qualitative Disclosures About Market Risk.Additional information regarding our operating leases is available in Note 6,62Leases, of the Notes to Consolidated Financial Statements, included in Item 8,8.Financial Statements and Supplementary DataData.64, of this Annual ReportItem 9.Changes in and Disagreements With Accountants on Form 10-K.Accounting and Financial Disclosure.120Item 9A.Controls and Procedures.120Item 9B.Other Information.120

PART III

121Item 3. Legal Proceedings.

On December 8, 2005, a purported class action lawsuit captioned,Jasmen Holloway, et al. v. Best Buy Co., Inc., was filed against us in the U.S. District Court for the Northern District of California. This federal court action alleges that we discriminate against women and minority individuals on the basis of gender, race, color and/or national origin in our stores with respect to our employment policies and practices. The action seeks an end to discriminatory policies and practices, an award of back and front pay, punitive damages and injunctive relief, including rightful place relief for all class members. We believe the allegations are without merit and intend to defend this action vigorously.

We are involved in various other legal proceedings arising in the normal course of conducting business. We believe the amounts provided in our consolidated financial statements, as prescribed by GAAP, are adequate in light of the probable and estimable liabilities. The resolution of those proceedings is not expected to have a material effect on our results of operations or financial condition.

10.

Directors, Executive Officers of the Registrant
(As of March 1, 2008)