BBY - Earnings call transcript Q4 2019

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to Best Buy's Q4 2019 Fiscal Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions].

call by recorded approximately this will playback reminder, available be X:XX a is for being and As P.M. Eastern Time today. [Operator Instructions]. turn of I O'Brien, now the over call will to Vice President Investor Relations. conference Mollie

Mollie O'Brien

good morning Thank you everyone. and

Joining me Hubert Chairman CEO; and CFO. today Corie our Joly, Barry, our and the on call are

why directly be an call of measures financial available these will GAAP non-GAAP comparable financial investors.bestbuy.com. non-GAAP and discussing these most measures GAAP the of are our on morning's During be we financial measures and explanation non-GAAP in to both website, found is today, earning useful, measures. reconciliation financial the A which release, can this

from the business of the meaning and cause statements investments that such XXXX. most of recent differ revise statements forward-looking These our uncertainties the events to risks on update performance more we'll Private information initiatives, considered obligation and address could undertakes to expected Act current are within of financial the to growth for of Some may the of subject and after risks circumstances that to to and plans, results forward-looking conditions, make these company's call. forward-looking no refer materially or or The release XX-K may company Securities earnings statements company statements. today arise the Litigation are any Please and uncertainties. actual date Reform reflect the this

week I revenue sales from the now reporting week and in fourth excluded non-GAAP are XX compared quarter comparable today to the call approximately Hubert. quarter. last reminder, will over our year's calculations. EPS. we was Last of $X.XX $XXX last turn week extra XX a the estimate extra diluted includes year's is As approximately to year We million weeks

Hubert Joly

turn joining we our our on and provide XXXX, will fourth priorities for then Best progress for as results our building our first, the annual XXXX. I the financial Good today fiscal for to review just strategy. X%, Corie proud the we a fourth our implement And our our which you will of financial details delivered. on fiscal by quarterly top an will But I over discuss quarter us. year. we In begin Enterprise update will comparable on the are quarter of results of our we've New call Blue with X% And XXXX last thank very and morning everyone. outlook. additional sales is performance, Buy grew I

said and in top X.X% full non-GAAP our up expanded fiscal year's to last share We operating revenue XX%. we on on X.X% comparable excluding and our This $X our Enterprise indicating of two return grew future, that our returned the billion which repurchases. our delivered dividends Day also in invested non-GAAP non-GAAP revenue producing income is billion fiscal year our XX essentially reported at income a basis, in stacked on a I to $X.XX, capital allocation operating XX target On year sales non-GAAP approximately EPS of best expanded week, up basis. extra From billion by XX% operating points $XX.X we of the and our at and investments XXXX a than And with growth would. week provided comparable our by EPS and years. comparable our We basis we grew rate we met sales now just XXXX. is XX.X% diluted our stands week XX capital by XX% EPS takeout non-GAAP we years the Including annual points basis compared returns. basis. XX that rate year on our a extra was note last delivered, non-GAAP XXXX, of $X income shareholders is very cost through formula Investor two earlier standpoint, of attractive in we

In these our during our competitive Best progress XXXX, differentiation. fiscal enrich financial Buy implementing develop made XXXX technology significant also we lives strong results, further through addition and to strategy to

me provide our highlights starting customers. with some Let

Our the as stores digitally, their them improved they provide in noticing we interact customers are us experience homes. in with or

the basis in and I We Promoter of core Score interact our the saw of in channel. us particular note revenue that with than increased the increasingly business across segment love our customers online stores, also growth our our For rose with channel. basis domestic customer in year, and all in more channels, our Net driving came brand points. more our XXX than through points our XXX online XX% in-home QX

success our of the driven our employees. is and customers by talent enthusiasm Our with the

remarkably and scores our Strategically, how high, what rates with we further lows. new to progress Our employee in for stores made we in expanding do we've turnover reduced remain interact engagement our and we customers them. record

Here are examples. a of handful

a Having value unlimited The provides when compelling our members. all technology is Tech members matter for Total a launch for our proposition support Squad brought service first no where example or the unique Geek and they Support their is that program. it of

We continue the and members. than pleased million ended be with to more X enrollment with year the customer

example Another In-Home the is Advisor expansion our of program.

due across provided customers Since been October, seniors consultations we the generate these homes the has the company we live order integration strategy to Score store Promoter leading Net higher creation per higher technology. basket envision program step aging approximately have and fiscal expanded acquired longer we nation. more from their and continues took rate tangible a in a much During to services health from revenue than begun the XXXX, the XXX consumers have attach to paid profit and in-home GreatCall XXX of the with materialize. Both and is well and services. our in as higher gross XXX,XXX the opportunities help acquired the be and in online it, interactions to a seamless connected we of turnover health, customers provider is low. employee we In for tends advisor value and forward to The the it have high and love in to the that employees rate than advisors free to

fiscal XXXX, experience for the initiatives and transformation, customer During enabled advancement partnerships products product chain combination around continued including of to expanded by through fulfillment, of automation. elevate small our a the supply we

continue products delivery to within our option delivery order. metro also And speed of items course XX and our have We We improve one same in areas stores expanded of day their to placing thousands metro and offer and XX options. areas. day in customers to their of up next customers in of delivery day pick day same the next now on hour

TVs service. fund locations brought distribution costs center and in work, capacity which improvements offset experience our to parallel order and the customer is our investments pressures. customers, to quality reduced efficiencies like significant products and the we delivery appliances we large continued to installation In in expanded of to and and closer For driving drive

fiscal out. we annualized QX During XXXX in million and billion is XXXX. $XXX $XXX towards XXXX, our total fiscal $X.X achieved since This of Blue now cost we $XXX goal efficiencies, million XXXX and reductions of since cost launch in have cumulative bringing of Renew taken fiscal to the the million

in advancing sustainability to we're these efforts. our our corporate of accomplishments, addition responsibility social proud In progress very and

Companies annual on number named just one Sustainable were we fact, Most XXX Barron's list. In

of as I as So implement we as in associates so want XXXX results. are pleased hard here. the And our and work the our we're very strategy driving Best in appreciate them recognize our partners summary, with we publicly producing these well Buy I terrific results to

opportunities of So about excited us. as the we look ahead forward, we are

about me for the is say note these, There about let I Bloomberg XXXX. to the X.X% basket forecast a XXXX, more the which to I Before calls economy. aggregates the increase say spending would in environment. economic words much about forecast, consumer in X.X% been and that economic XXXX another discussion latest levels which similar few of composite has

to continue basis in on we consumer a positive environment So XXXX. this operate in expect to

this, as in areas OLED, and months several drives very are technology areas. potential existing our as of technologies opportunities In several of hardware relating opportunities the the years. emerge to expanded power, of he innovation This of of this continues accessories. foldable existing we introduction by in penetration and computing, primarily Theater, we course years. our security We're what execution. and necessary increasing technology new expansion also be is has like and new factors, a actively in from kind relevance beyond technology the innovation categories In excited drive existing strategy mobile, in for technology and cases like see wireless to quality XG, Home new context, several participating over performance to innovation excited interest next we'll which and demand is technologies and of our innovation over performance see and the that consumer accessibility. related to watch has next potential Now of over technology, large screen customer interesting XK new in introduction to and unlock penetration the of the such the we used phones rise next in Notably both across the increases the driving gaming of categories, to two the accelerate this sizes of In XK.

to by US to recent a is We grow consulting This also connected by technology. firm XX% which penetration see homes cameras, Internet triple Smart XXXX opportunities retail of are XXXX. connected Home of report in XXXX. in size by market buoyed from than Smart to Activate expected Notably the to forecasted hardware significant Home US from like XX% is penetration more of things growth products according

the technology from et to multiple is health age from with digital across that to seniors. babies exciting fitness, enormous believe also health, of area groups help use cetera opportunities with We customers an sleep their

the The of of extremely about is opportunity, driving of purpose is up last the in opportunities reason our almost strategy digital an us exhibitors we Show next believe As at the relevant. ahead XX% Electronics versus the illustration year. the health was January we're number Consumer excited

addressing is health enrich technology to customer through by purpose and and needs security, wellness. as food, in entertainment, Our such key communications, areas productivity, lives

the pressures relationships. this us from potential the help focus taken parallel that business. in reduction this, In further this excited we offset continue are lasting the can We first by to our fund by the cost see have steps opportunities investments and we be and in for to to customer in encouraged strategy deeper the potential build direction expanding

the are purpose by who excited our particularly our customer-oriented incredibly people, am talented and engaged, by strategy. of power and I driven Finally,

now see resources better align know, the from to and customer that standpoint. you efficiency and responsibilities time we've to revenue our accelerate recently roles, an Altogether, realigned to to already potential the to our from gives As and to strategy the both us transformation play and pace. we senior and is play sense this a win can a offense this has with standpoint accelerate

talk about XXXX. technology At continue priorities relationships. priorities me to let building So lives to purpose our to with backdrop, our for customer and the solve this level, market our of bringing as company a transform to the customer through real solutions highest that fiscal support in by by needs enrich

As such, we continue do for will we expand customers. what to

base to by it plan relates and we Total capabilities grow new self-service support. Support, to the as around So the adding improve Tech experience member proactive and

and health service by to will We expand scaling monitoring the with business commercial and services focus senior the continue population. both devices our on a GreatCall the consumer

over in opportunity of pilots health care could currently while would live healthcare number appreciate children for power We're related we in growth reducing And material that longer us to managed homes, aging enables with of a parents, service of seniors become organizations. a As believe monitoring the this of us. many costs. potential time, our their

and capabilities with Now gives but is to new us that combines focus needs go our in in In our the interested not to we that believe homes, solution, of ability the customers. continue support our space work talent expanded health our partners to to company technology our unique ways of our advantage. leverage who the unique we're and only people's our our unique vendor a meet we'll digital strategy,

tools our for home the we In in example, partners line In support Advisor In-Home we For parallel, our Total and are we their solutions program In-Home to and vendors will many continue will to Support in we’ve partnered the Tech continue members our engaged our interact to train, investing customers. productivity. Advisors. and with maximize create offers adding evolve including way for to with advisors to channel, several expand create and

ways Our experiences the the of in home In-Home that just is we Advisor one today. deliver program

and other serve experience that physical continue shopping. across our website, leverage and customers to a digital to we experiences with so in Buy. ways channel the in multi-channel we to currently developing And Best the online and home continue channels ways design From standpoint, improve are customer we'll holistic strategy home all further create innovate app to differentiate the needs a and meaningful across interact of that relationships

We transformation, continue optimize fulfill speed and stronger process both unique needs. and delivery chain will installation. continue associates and the expand options, the to to get automation way relationships customers' order fulfillment of will in technology, increase delivery we work with improvements including they proficiency customer our supply using And stronger improve our to to drive and enhance and our

more has And been a to years, we two as we're We've been driving brand the annualized efficiencies million cost $XXX the run our not addition, over than for in reductions throughout last several down. rate business. will and years. In of keep on reductions slow the past planning

XXXX Best our our energized are So our in conclusion, Buy results, our as and momentum by opportunities implement we strategy. we

X.X%. we’re best course top guidance growth the sales of anticipated and stack of in growth year to the two continued expecting maturation look X.X% reflects category. at comparable factors and such specifically is expectation of phone we cyclical XXXX mobile of of console the the XX slowdown years our as category This gaming As fiscal the on

operating in to customers our the can like We focus hold balancing of guidance. address technology turn become over needs, provide and part our their and to reflecting And to consultative our processing strategy, -- our now, technology bigger of our increasing like following the income solutions, to space we more the constant and bring an the on offer our business in expand them have and innovation to We services planning and operating rate of We lives. Corie rate opportunity are a people's again investments with efficiencies. continued truly we lives. opportunities And connected to more XXXX a their them for our the QX approach acquisition like capabilities performance the particularly house relationship of range the fiscal I'd details call GreatCall. like on rate

Corie Barry

everyone. Good morning,

about results you last with last the EPS per $XX.X talk talk non-GAAP versus billion, we of The On would I I revenue like diluted to share expectations Before our year, earnings shared of versus fourth $X.XX. about delivered them quarter. quarter wearable guidance revenue was we at we expectations our expected lower a high expected and gaming result and category performance sales our and mobile phones. exceeded than our better our the in saw categories sales standpoint, end From than range. product comparable of results in Enterprise

Our operating management. expectations, exceeded results I due our expense primarily will income to our talk strong about versus now rate quarter fourth last year.

XX quarter count As of year and increased non-GAAP by Mollie last lapping extra XX primarily items diluted and diluted comparable decreased included of billion, effective revenue benefit EPS. Enterprise extra per net in rate. quarter. sales which diluted week. by to non-GAAP the share change $XX.X increase offset extra week tax last $X.XX stated, per by weeks, EPS year's X.X% the were share last approximately lower driven this was million a $X.XX. operating week to income $X.XX of non-GAAP last driven a benefit income, the XX% estimate by: week year. year's driven increased $X.XX year's $X.XX Enterprise These approximately Revenue This $XXX share partially from non-GAAP primarily EPS fourth or We from approximately the X%. compares to was $X.XX higher an

X% of XX included you shift. point we sales from last basis the impact calendar comparable a As our with growth and shared quarter, expected positive

X% XXX growth merchandising year. to the appliances, driven loss largest our perspective, decrease format year's Best and fiscal X% XX fiscal year. which XX both in Domestic reminder, wearables, and offsetting the last segment, $XX.X are these Buy comparable extra XXX small online by basis, These driven declines revenue decreased compared of closures In more declines shifted domestic phone comparable This were billion. by a year. on lapping revenue last of revenue the XX.X% a year's calendar were and computed week category. sales aligned sales negative large was the on sales primarily GreatCall, and following As of XX% was include primarily increased from our revenue are segment, sales the higher lapping Partially The last From increase closely was X.X% and drivers of in a Mobile X.X% by growth primarily revenue of reported partially In conversion comparable our to and quarter. Home the past decreased which our revenue weeks online Domestic major our like-for-like and and XX.X% was gains comparable from traffic. sales week, not quarter weeks extra last gaming. store acquired third drivers sales comparable in comparable by week revenue International Smart appliances, last mobile impact. $X.XX of The offset to year, comparable On Canada was our currency to billion approximately revenue X.X% increased driven increased in and X.X% top and $X.X of year's Mexico. fourth basis due of to both and increase increased foreign billion. points were

periodic the rate; profit chain negative Turning the plan rate, products higher from transportation higher the company's partially to an was which basis Total were by One, profit worse both GreatCall’s The were Tech expectations. benefit Two, year. initiatives. point costs, category, an XX an decreased decline was rate the by: services now basis the investments with in impact basis of supply The benefit impact from a impact impact last chain basis improved profit, sharing was in gross portfolio a costs. XX.X%. than the profit points profit Enterprise versus the gross gross point higher And Domestic company’s These XX of Support driven gross line included offset point negative three, pressures the from share approximately of gross and and refinement costs and services XX.X% including approximate lower expected, higher XX The revenue primarily profit profit XX margin of the offer; XX.X% improved in profit included recognition which optimization gross rate to supply rate

revenue was gross than rate to estimated basis usage primarily increased was by This over higher our non-GAAP the during usage program line to utilization category. quarter. which better contemplated more impact rates Regarding This the phone our revenue new a the contract improved matching we we in now compared with in and to profit on revenue category. of points recognizing of member profit services gross refinement sufficient International actual from due revenue rate on categories membership profit a recognition refinement basis driven provided from product a our the created had gross a pressure the timing. The lower have profit sharing basis therefore, revenue to XX.X%, partially recognition higher straight move refinement, basis, were profit Canada, previous the year-over-year initial approximate history point slightly XX accelerated recognizing quarter revenue to of favorable revenue periodic gross contracts This recognition in These analysis. several offset cost in fulfillment the revenue. recognition fourth impact XX and but gross mobile negative and recognition rate benefit both we fiscal improvements rate an revenue increased guidance in impacted was margin in the last profit the by

On with reduction. was GreatCall lapping last and were was as of XX expenses; non-GAAP specialty expenses billion The and offsetting SG&A, expense; which versus of to extra of SG&A billion and points a by: Enterprise year. week items SG&A associated Domestic compensation extra expenses versus International $XXX year impact due last Mexico primarily or $X.XX revenue were of higher labor offset effective reduction XX% lapping year. were to last the to $X.XX as depreciation primarily discrete or of XX.X% include and incentive of which $X.XX and other from non-GAAP with XX.X% in number decreased revenue the was year, basis There past week offset and effective the rate increased management rate the revenue. stronger last expense million The The a or from by the year. or was result opened year. revenue $XXX reform, partially investments, variable benefit million last higher tax offset XX.X% of impact statutory $XXX and decrease was lower which billion, of tax of Canada in tax cost the corporate costs non-GAAP US decreased a larger year’s to a million XX.X% in rates, million decrease turning largely XX.X% percentage last incentive-related $XXX as primarily the or tax associated XX.X% basis, growth the higher lower operating of of favorable revenue Now revenue. of to the a SG&A was due resolution non-GAAP year. million payroll revenue, to the and foreign by $XX prior new rate in tax partially due matters exchange in stores

whereas became reminder, inventory increased we effective our X% full increase lower to year, owned assets fiscal liabilities, season. tax impact flow X%. last we rate XXXX, the our statutory net for receipts timing an to in our year will As year's comparable a ended the a on on will last compared one the inventory compared this From approximately the We and position balance quarter the of payable Xst, new due have a accounts cash standard a our The and to new perspective, inventory over higher quarter. with month but will holiday expect was adopt accounting. it earnings. we materially lease primarily year standard anticipate In to was applied January lower immaterial

capital As changed. has approach our it not relates allocation, to

to investment shareholders and over repurchases, operations excess flow free growth, maintaining through to including return investments and time is cash strategy dividends and in acquisitions, potential to while fund credit Our grade then share metrics.

billion XX% that quarterly share payout share, provided outlook dividend and dividend and we $X.XX $XXX repurchases an ratio This morning, increased between million to continue a for of to we XXXX. to target $X announced non-GAAP XX% in per We fiscal our XX%.

of new income non-GAAP We rate comparable out 'XX’s the sales Enterprise approximately to the of guidance. range February also of billion; Enterprise guidance. I of to in non-GAAP to up rate; of approved in X.X%, $X.XX flat rate announced revenue talk X.X% in Enterprise XX.X%; financial our that which repurchase $X and of $X.XX; Enterprise to $XX.X is I EPS like authorization $XXX the would of $XX.X assumptions XXXX. tax Board range effective call year non-GAAP diluted about would X.X%; authorization fiscal billion fiscal million. a the income approximately to share the a of from existing range our $XXX to Directors like full a capital number operating expenditures [replacing] annual in now to XXXX reflected billion, million

increased cost new in and returns technology combination investments offset investments, from the partially of and and a in particular to be business Our strategic depreciation initiatives related ongoing and ongoing specialty capital reductions labor, by in will efficiencies. pressures

fiscal performance for our in wages expected reset full expense fiscal are grow a rate offset quarters, Although SG&A a costs year be assumes be fiscal flat expected revenue we lower of be and offset expenses as by expectations. are percent continued partially will and there between percentage continued to may the compensation to of higher variations are technology higher be approximately as flat outlook the in our and chain profit as percentage as investments supply targets of GreatCall. to increased of XXXX. investments low in margin XXXX transportation The dollars incentive a as the approximately XXXX GreatCall gross in align our with revenues by single-digits and to

we imports quarter on into estimate about September of told went of US certain that to relates it effect lift billion $XXX that X%, total or we from touches $X.X around last goods a billion As our sold. cost China, of you tariffs products only in

expecting Enterprise tariff that of diluted $X.XX; we talk approximately of where in current million revenue Enterprise sales stay billion QX, billion; at the of Non-GAAP also the of to$X.XX of following: Our and $X.XX like income the would I XXX are XXXX count EPS flat a fiscal to specifically rate outlook assumes effective a comparable XX%. range growth of to X%; XX.X%; rate the tax $X.XX about share average non-GAAP approximately shares. diluted to weighted

host Finally, our referenced, XXXX, update our previous we quarter, strategy during to We provide an the call Investor third progress mid-range and where fiscal operating now revenue will as essentially to on Hubert an we turn operator share financial our I of more years will income have met fiscal two for questions. the details on and Day early. plan the goals. for our over target

Operator

ma'am. [Operator Thank you, Instructions].

Our first from question come with will Scott Mushkin Wolfe Research.

Scott Mushkin

we Buy So the first and I at forward? business with that look one do growth think results great outlook, better look the with is business the we we and But comp comps over I of that thought. grow or of played the more of how X% the I that line. is the a hard probably Best all, of look I as mean, at on it obviously, people driving EBIT multi-year just guidance at do? growth minimis How a think think, what's grow to X% than things to can we've going struggled a term? as lot mean, should over the longer we And it, level? still a fairly de is period

Corie Barry

outlook couple have we term point The the fiscal year of low-single-digits guide about we XXXX. We our the thinking in is look we'll with is over range. right thinking we ahead term mid-term that strategy in well longer last in is anything And there seen XXXX as that that have to fall more question that feel the trajectory. of with that delivered through compliment said how us that. range that. and if after and we update don't of with flattish changes given our and that in we then line as view we we of that environment going the about point put our the how that for the amount strongly QX I execution operating customers, we're least in out feel go at results. have you've we strongly through we we positioned talked an a But Investor had excitement in ability the Investor Day think Obviously at just next the you about on of Hubert any longer And as obviously out with on of Day belief appropriate see you consistent believe the to that also income bit front grow in you the guides least line our with XXXX, technology, the the outlook, the that back years. Thank like our

Operator

question with from Jaffray. Peter Keith next Piper Our comes

Peter Keith

I you guys just flat year-on-year. stick the EBIT I the dig margin so can Corie, want into margin to to guidance, want to appreciate

this in However, thinking about was to of going had XX clawback. basis some because XX was the compares my year, into launch pressure, points like Tech easier which you I Total was Support

So can you of EBIT compares, margin just what face of these offsets walk the are? us through easy some in that outlook the

Corie Barry

bet. you Yes,

Investor we we Day when laid in things So our make that to wanted of financial well, landed we sure had hit out the we of the fall one as we that the XXXX. had goals

offerings even long offerings GreatCall. road some relationships still stickier IHA example make interactions our talked we have say with in finding experience, would down to us of and feel That of and terms TTS our Hubert really with that repetitive to way customer life with being goals, relationship-based meaning bringing all customers. have go we to early we grow we we room ways offerings our with really And still and have solutions said, improve a customers. like strongly we of think the to more I the to strategic just and those started that about, those have an those as

help us year, enable so those And And since life. always investments continued would there continued also in We last we need in that over of specialty we of additional build Day stores labor that we and specifically knew called and you bring out we Tech which we that are a out investments chain. Investor had are was some will that strategies supply one at while pondered make Support things to the Total to technology our talked like of specifically part called kind and all launching with time. there

of longer of so, knew Total would go that into be view mid-term is represented will multi-year in journey we out additional we investments continue be kind we reason a and And investments Support of as a this to Tech one the there type while because future. laid XXXX those,

continue to Now, find we're accelerate the trying investments we a in actually But like we're differentiated a with balance way reduction. because our customer seeing those Hubert between we experiences. of said to what we're continued those sure actually obviously, going making and to -- number it, that cost offsetting create that's

we in customers. our FY into you’ll so continuing for that develop those way see a experiences 'XX And better we'll think

Hubert Joly

is the because medium-term, choice. is this future, our win, long-term play for of words, to to shareholders We the rewards to building In in to is for differentiation, invest the these believe us the unique investments our other way reward, value create decide these Peter, We the a long-term exciting. could very slow increase think and relationships, solutions, best operating rate. this we down continue to income

that's business this so way. managing And why we're the

Peter Keith

I in those that should rate if due result of above a the couple change? the And in The XX% curious as segment, kind that we services I thus was just comp returns little as argue the of far. the quarters a may as just of Tech that But the high here. bend nearly forward, Okay. want rules you're I'm can to average getting stick was bit recognition can't run revenue next Total I services the a as the remember. policy. play with to on change for Support. at

Corie Barry

was growth last to Yes, we saw that of into the to about see roll services in quarters, the due of in over that policy. comp we line. recognition half the couple continue to the And straight next you're that few going refinement out while revenue the that year's

Thank with is will still healthy -- to half business. news under that the good good being growth there a sitting you. in is that services that continue So Operator be but

Our James. Dan Raymond from with next Wewer question comes

Dan Wewer

Thanks.

fourth Just the offer. also change, all you benefit you further of accounting about impact if will the respect the quarters, in changes talked next with Corie, it looking Tech on to quarter? the comment to And it Total Support see EBIT did the as XXXX could the bit a few then in rate

Corie Barry

last when lap year the the of with necessarily year to start going some change. early get be I'll the QX, won't because ultimately we're lap to we It of question. run the change entire the So obviously see but the you'll so as part you'll it you

actually on We've enough. history to the have refined for ran to had the with the it full Basically, methodology. around were year question the of were a sufficient a once which program bit history May. rollout we we to recognizing Your expand and ratably life why it. that more us using for enough easier bit we usage, was how change the we had We the little upfront the much it than And first the exactly history customers last we actual us initially is sufficient know revenue contract, because now. was match long have over

pull the is more the life you all more we're truth to the people the contract cost more versus sure means match make watching with on things the it over fulfillment the usage. are of revenue contract. match over is and life Because team the consistently that to precisely so to a the the continuing the And make keep using is, the We'll sure contract. working of with bit of the the in early usage ratably revenue

the what is making contract, to consistent the principle of those think And with revenue the usage get the drive so customers but you'll throughout continue really that and now fulfillment for do it’s us I in sure life offering cost. way more will us just tweak we're a matching a help in the see line that -- tweak

Dan Wewer

Total the of drop could Support XX than in usage If data probably XX? more would they're XX, are and front-loading a the rate customers months you because expect, that risk Tech is Total not Support, Tech renewal maybe using there

Dan Wewer

to rates to were precisely the say, we build I experience, in our continue that in development with relationships. order did of to Dan, are going going customer these renewal line was on I to expectations. the remarks, the stickier the In invest in fact customer comment prepared my

service proactive support. more So self also more I've capabilities, talked about

service have to upgraded be needs that partnerships security, to get self example, these more into your new also ways, service for you that around speed to advice vendor remarks I the and parental back that prepared proactively of my that opportunities control proactive. So you expanding about how to firmware getting to so talked maybe areas. tell you computer maybe in had we clean your are And in up or initially, or

you'll innovate, relationships one is so, expand to our these stickier time. to because and And see us -- customer measures that’s over our of of goals continue precisely one

line with to relationships. expectations, to but continue customer again, our in evolve So opportunity

Operator

Our next Markets. Chukumba Anthony question from Loop Capital with comes

Anthony Chukumba

because this of of just you're to looking wanted I So in kind through had was a little I we some take step time. year my year best your off a notes. ago, coming back call When quite

$X.XX got XX You in to for EPS And year. and you did That years. your X% of the zero $X full comp on that comp to the X% best quarter in a it to share XXXX. fourth a was believe I comp

a iPhone Amazon was was and EPS comp. that carry that X.X% Apple flowing in And sales with $X.XX did more with products. You

like are to XXXX. in in comp. and clearly would to you very what terms broke you you understand just to the XXXX I So to a zero that weren't just maybe $X.XX $X conservative trying expecting guided your of when there's in I'm X% right comments just the or love lot being right just that went

Corie Barry

here bit gaming as those There used of we've a couple our strong year And talked talked those. heading we of a the of that One, It side genuinely listed things gaming, of headphones a might versus carries things we of not was were start all actually quite slow the the that it about something about the actually last console, cycle things, in listed that That belief having very our the only for What broke line rights rising. was we be at in more peripherals gaming. that it And turned that us in gaming fortnight being or but that phenomenon and results. gaming, the switch material computing expectations. it great tends didn't year. front as switch the to such cyclical a out listed have social were we that are become as because business that would all to that change in a original didn't was see be visibility the listed to and clear. and particular year of after a into

year good little at was at think talking the it business look you there when be are, that a start relationship-based a of environment think of of better makes of you you're have good on necessarily about Hubert bit the even better and online, then is I the the that what technology, expectations even when put the excited strategy deliver also If health, going to we on in consumer and back rest year. consumer ability what more and an imagine acceleration around talked experience think actually of you I us necessarily continued our that and element you clear our in environment the early on this a of better performed Obviously into execution but -- about bit, I little strategy. top to a and genuinely execution were where initial that consumer a our and the interest in homes, execution the than our better about stores, environment on

think just up of way results accelerating you end necessarily the I at the a you also the expect in year. beginning didn't

Operator

Thank you.

Michael question Lasser UBS. Our from comes with next

Michael Lasser

you think year to the in guidance to comp and how going your into electronics that, expect for break your Can grow XXXX year share be your factored you at the new are ahead? what have much leasing consumer in a what you terms own, rolled in contribute market will lease out your you outlook Also, ahead? of outlook, program, gains that you the to down

Corie Barry

with The think the and kind years, start to you seen of thinking things this through couple and quarter ebbs the let's have And and industry. industry, like and last the the a flows, definition there's industry. what on not the first around across we're broader but NPD, Apple the appliances about phones you've slightly just products. of up flat the is remember, So obviously industry depending question gaming

definitely You've a little seen up bit. flash

of in the see anything we trajectory of in informed as massively some Hubert As industry opening us the front changes. his remarks, don't of

slight maybe kind expecting maintaining from gains little maybe over seeing. in share Therefore, realm would And ranges have that we're maybe up gains to the share or share bit of same that flattish, of guide it's is the that anywhere so we're something sense today year. given that a we make the

of markets. now pleased terms our program that number with of results expanded leasing the were are to an the we were the in testing In have been going seeing a therefore and we've of -- We leasing expand couple leasing we program, with solution. stores

at we customer the I a that is up we we’ve for the otherwise new open of that think have base access the to you be might we credit can opens have gave what products factored that that whole up a assume have it that that importantly able and opportunity most able be customers the product so the But products not experiences opens in. up we or sell. offer to like included the it customer potentially actually in who set you sell. to might can us. kind that not chance that base we to guide for of otherwise we to otherwise access like is about It whole we that to That purchase

Michael Lasser

sneak question the contribution the the just question, change one in fourth If getting I Tech accounting quarter? could Total last in. from We're what around the was Support

Corie Barry

how we're remember, revenue not of clear. the is accounting refinement to a So very be It just an change. recognizing

it the exactly from that roughly half called of what impact about to offset but the out is, program. We I saw as our kind think impact or about would we that enough amount haven't we saw the warranty

by refinement recognition revenue the of warranty, from the upside downside So Support. of was the offset the Total the Tech of that on half about

Operator

Our with Scot next from Markets. Capital RBC question comes Ciccarelli

Scot Ciccarelli

So basis your the expanded to us Apple's incredibly think to yours. just about on Costco, impact obviously, help dilutive a XP of can expanded and important partner potential you you're about on their distribution business? distribution And the thinking understand Amazon how they're of of trying impact

Hubert Joly

Thank Scot. Yes. you,

the at and range So of X% impact the end we expanded distribution that included that of reflected comps of reported Apple. our QX that in the of or top were

we And vendor we feel would work have with frankly, that stores meets this. experience XXX the and work in in is Apple in stores. provide to sure of particular the is So in that when we case the our expectations. key proud, our partners, customer Stores customer say really offer we're -- What our good about both the we I we unique make experience we within very Apple our very

partner, our with Apple the We the with Care. are stores. move case have innovate in them we'll key that stores. goals provide advance relationship our the partner probably vendor And also ways largest in our line of forward And service our the is in X,XXX We've and expanded relationship Apple customer as continue some to and reseller services. are experience. of the around vendor of with experts We frankly, in that we Apple

with to So we live we some the of world's compete in where companies. get foremost world, a

stimulating. sport a our there's few others and that a named makes You've couple and

are kinds customers. experiences experience our experience moving keep so of forward move that a to these offer drive because encouragement And customer so for forwards some we and innovation we and unique

Scot Ciccarelli

a roll to we as like the in mobile share in obviously of in decline this to clear failed of through to the ramp? expectation guys like kind was it Just kind your Is continue is initial quarter. you and or be looks expect to mobile actually perpetual 'XX, mobile calendar situation impact the and phones declined of kind

Corie Barry

clear, to mobile a what seeing little the mobile discussion we're different bit just separate discussion. So Mobile, from in question. is I’d expanded be distribution the a

This any and over a are our maturation expectation I phones in we've taken like specifically of who associated kinds just couple written trendy said just extending for in mobile remarks, and of of about how -- next as the lot been in don't guide some that buying prepared softness. mobile and And year. phones distribution now it for in with broadly this consistent often people we've it business much are we've a taken that -- pretty are them. loss was last share what and We of buying pushed the changes. cycles think on of expectations you've we a replacing the is the replacement lots cycle, a into seen more our forward for by of years. And public, pretty question general the way, our mobile question feel the people actually general

Operator

you. Thank

with JP next Our from Chris Morgan. question Horvers comes

Christopher Horvers

which to follow a point out on I wanted up operating clearly the margin focal there. question -- I

been margin XX was XX a you in So Corie or against XX week that. XX XX expanded it higher share presumably versus week, something than what operating on up the week can have the up basis, it would if the

of question operating on comp the see the investments is because XX, a the in opportunity margin accelerating is slowing basically difference? so expense level it like or would in the sound like did you are you comp So 'XX actually doesn't perhaps expansion? XQ, did X% if is you So

Corie Barry

of a rate basis the if on points have week XX basis, for XX versus were year, So I adjust, we to operating income expansion. FYXX to FYXX XX

rate basis, almost was at we operating would top-line. pretty you we We the top-line on And beginning which on week comp the on income expansion. X.X%. expected, obviously, been that the have a XX higher If of basis than the a XX guided remember had had significantly flat year, points X%

the the the They they progress feel what really that at that in different accelerate initiatives. that had pretty are we with will range year, goes pacing expected accelerated, help have comfortable conversation I we rate. at believe the on that say look we is told line to the we than guidance. beginning. And will pace think in continue into back 'XX of actually were so time us I we the And the targeted we the our that I investments fall having, investments to thought make in operating had in you original as our which a and wouldn't think flattish places obviously to gave are income you original lead next gave we it you we the like we in we

comfortable if what yes, to the we your the see a massively we we different question, so of profile. you equation. what from front both And obviously of us cost reductions into account It But economic takes pretty the in us, see may feel investment come showing. and we're to you about top-line, front outperform back I with in

Christopher Horvers

-- Can now business there and follow lot are there's that remind around such year-over-year us your catch-up as refunds. of business dollars there quarter? out expecting were tax and that up, delayed, Understood. you And a that, with a some seeing in impact the in then actually of tax a latter ago, years noise is they part you're being the did few anything you lower the when refund

Corie Barry

most an and of the that of that impact of the but that commented, in of So throughout it how actually as tax come return We're quarter. has ultimately exact their now in in there being throughout return on being rates to a what back matter most year In not of even good just as but out and take been returns. people us day, year evened the also publicly feeling end to tax down The years over slowdown what keeping no ago is it meaning did pay on the their amount quantity business of quantity is both the to eye specifically two at the the right right bit news we're return little very softness is down. actually back I quarter. clearly amount due as time, we was will distinctly, will for itself. amount the tax call was we reductions of remember a what much quantity and the in the question the QX a what see of also our saw quantity the for And returns returns tax of now is home the

and the throughout some definitely But timing QX kind into watching the thoughts it year. guide. those becomes So we're have a question incorporated of of

Operator

Our comes America Curtis from with Lynch. of next Bank question Nagle Merrill

Curtis Nagle

quality program, And more to I you guess to So said it theoretical guide? B, the I going is who focus did process -- qualify But I any, bit is given risk lower then less that much a a more and customers just know helping. typically question. credit just guess or you're out, probably inherently and choose bear of know little I lower is is credit these income. own guys not how Why to roll on lease a terms in want to are typically but it's of you sustainable the that in arguably it business it can’t

guess So see to I do you any that? risk

Corie Barry

is going genuinely us. So longer included think comment products I of purchase first couple this to on agreement. risk guide. specifically customers important with the here a all, we're agreements did bear the don't term the not able over is we exact whole new But We guide. of of that amounts what's the that's obviously, tranche that included test be not the that The would amount in some we've in And of this have, markets. in to we the a

sell. can able of of the for actually credit even And us. serve a time. is agreement we therefore gives products for offering said, off ton is able then them be of being lots do to it That think At be customers. that some type end for access Best qualify -- have. type so and And these I pay day, customers to over to give customers to sense would be for I And able the the not want option we the widest likely of with to an the are and to makes that of it it them qualify we the this that we what think makes Buy more sense who

the And to opens it, start I have agreements. time. sometimes is will than -- feel few for think people go and And just credit. these no we cases is history a them to is whole robust bad this who this a the very, X% have much so actually there shown be up some new more their in able pretty so has to credit over And range mean about the isn't this to just less customers actually portfolio credit, lead on very, who build passionately, credit to very think of I doors portfolio delinquent a people

otherwise might some. a when this so have And actually is create a offering I they credit the very in population nice lot helps not and fact think

Hubert Joly

credit with their acquisition and with in customer a is play early catching over to the this on So relationships people history time. view build

a to this allow view So actually our of with consistent deviation is technology them neutralize strategy a a customers, with is going relationship from time. and are not helping strategy. the over overall more help customers we of with This to

So customer from from standpoint financial and a obviously a it, sense standpoint as we're excited makes well. about it

Curtis Nagle

flow like And year, guidance would is did more. probably It just than cash really is quick on looks what some lower for that the buyback, like it you conservatism? just this does look support your

that? curious think just I'm about how So to

Corie Barry

our like making makes level through sense minimum have support different taking flow number look a sure at that scenarios. a we're we of always Obviously would We behind a us cash almost or last cash billion the and feel We've we capital the scenes of line acquisition on in to acquisition. and through either with in allocation strategy. year always said, operations the business very first spent so our $X GreatCall clearly we're to going fund invest

mean has we amount year and in cash historically the that and generate, our what And this flow balance we like keep that and given with shareholders did feel that minimum that depending we single above positioning. right will year the this we'll every dividend then need, essence capital not third that revisiting on been access we we and to seem by that payer. premium whatever so access return beyond we Second, then that's is that

Operator

Thank you.

final have comes And for question last with We time one Matt question. Barclays. McClintock from

Matt McClintock

I was quick. wondering Hubert two questions real

out The a relationship tale about relationship year? on throughout has creating for I relationship made extensively of monetizing Have the one what now the success year, customer over efforts you the this first there? have of terms was the with just that program you is talk well that call had been In-Home that Advisors. and And in wondering you some

Hubert Joly

Advisor been we're said I I been as certainly, transactions setting a journey think we've In-Home customer provides the think selling of relationships. I Yes, products. still we’ve and The ongoing us we've retailer, our of and interesting scale, think opportunity, at kind up beginning -- to build we're it’s -- before learning, still this focused on

and very building we're take something relationships. we're So is is moving by I But towards we're the results. the and selling This seeing, beginning capability institutional think will at learning, time. building that that's solutions journey excited

or on key As an indicators. modifying adding focus illustration new that new involves a performance

on would basket growth forth. focus you and transactions, retailer, As rates, a so

with customer a As Buy relationship, are many relationship market, be many that a in Best whom a focused are to How have households we focused my share of customers what’s going there. retailer, them local of how wallet. you're

Just think the we beginning a by the the can can see forth. tools the from have which meaningful side for there. is journey me upside we're which the personally you upside relates excitement saying magnitude things, any you the captured part because to making, and feel And of of of so that and investments training, I these the that and of operating change we're the at is

early very innings journey. the of on So that in

Matt McClintock

it for foldable that more terms of Thanks you about with be your talk seems Could the you XG overall? meaning and brought could the foldable brought and ASPs of the a in historically might one squeeze how to like phone. overall category impacted potentially at the just could in, how And up business up phone, you revitalize game mobile, something similar then tablets I if that. changer, looking be you

Hubert Joly

to we'll the our business. and Operating for is that the with have question Mike Mohan going Officer we Mike just wrap. call And then on take Chief us And US

Mike Mohan

devices. see the happening have the Matt. we for in mobile what's Thanks all Clearly, question, an It's to exciting time increasing technology. of talked price about

interest but so how used from limited a acquisition do have And standpoint, an this for them, technology new cases. what fairly solve of from all going it to it high extremely an and level appeal of is can does consumer,

some enrich in most we show go this the do. our to stores, excited excitement products customers even showcasing think what our positions continue you technology, inviting us very our into think the I and unique onto and our probably when area. help In-Home lives is so what way in that's visit show Advisor best can how in we of And site, people will So I people having we're about to the place it a people's technology put can

problem here. that forward We leadership a take and us help I on to always will will expect something lean think solve would position they a customers

Hubert Joly

passion associates the and to show talent Mike. just across again and to say closing, want of in for hats-off I functions in the want And appreciation all my thank of our I business. all you work

And are interest to we to and guys forward you Buy. look I move continue to to You want continue joining we our update as in amazing. Best for you call thank your forward. And

So you have a great day. Thank you.

Operator

ladies today's you, Thank and teleconference. This gentlemen. concludes

You may now disconnect.

Best Buy (BBY) 27 Feb 192019 Q4 Earnings call transcript