Best Buy Co., Inc.



       William Blair Growth
           Stock Conference




                 June 27, 2006


1
Ryan Robinson
    Senior Vice President –
    Treasury & Corporate
    Development


2
Safe Harbor
     Cautionary Statement Pursuant to the Private
       Securities Litigation Reform Act of 1995
    This pre...
Strong History of Growth
                          EPS1
                                       ow th
                     ...
Our Journey

                      Fiscal 2006   Fiscal 2007
Before
Customer Centricity




 5
Customer Centricity




                    Invite
                   Employee
                     Ideas



             ...
Our Priorities
                          1. Integrated Customer-
                             Centric Operating Model
    ...
Fiscal 2007
          First Quarter                           Annual Guidance
             $7.0
                          ...
Our Growth Strategy
                                                                                 $100          $350
  ...
Kevin Layden
     President &
     Chief Operating Officer
     Best Buy Canada



10
Dual Brand Strategy
               Boosts Share
Canadian Store Count                                         Future Shop:
...
Evolution of the Dual
         Brand Strategy
 2001                                      2009

     Progress so far     Th...
Customer Centricity




                     Invite
                    Employee
                      Ideas



          ...
Brand Differentiation
• Guiding principle: replicate U.S. Best Buy brand in
  Canadian marketplace
• Future Shop brand wil...
Business Model
     Optimization
     Canadian Operating Income Rate
                                               5.0%

...
Results are
                 Encouraging
 First Quarter – Canadian Results
                                               ...
Our Growth Strategy
                                                                                 $100          $350
  ...
Your
     Questions


18
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William Blair & Company 27th Annual Growth Stock Conference

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William Blair & Company 27th Annual Growth Stock Conference

  1. 1. Best Buy Co., Inc. William Blair Growth Stock Conference June 27, 2006 1
  2. 2. Ryan Robinson Senior Vice President – Treasury & Corporate Development 2
  3. 3. Safe Harbor Cautionary Statement Pursuant to the Private Securities Litigation Reform Act of 1995 This presentation may contain forward-looking statements, which are subject to risk and uncertainty. A variety of factors could cause our actual results to differ materially from the anticipated results expressed in such forward-looking statements, including, among other things, factors listed in our Current Report on Form 10-K filed with the SEC on 5/10/06. That 10-K describes additional factors that could cause actual results to differ materially from those contemplated by the forward-looking statements made in this presentation. 3
  4. 4. Strong History of Growth EPS1 ow th d gr unde • 30-percent earnings $2.27 po Com 25 % $1.75 growth in fiscal 2006 $1.44 $1.11 $1.07 • Revenue exceeded $30B, net earnings FY02 FY03 FY04 FY05 FY06 FY02 FY03 FY04 FY05 FY06 exceeded $1B 1Pro-forma adjusted for FAS 123 expense • Expanding into new Revenue Growth markets-services, ($ in billions) growth unde d m po o 15 % C small businesses, $30.8 $27.4 $24.5 $20.9 international $17.7 FY02 FY03 FY04 FY05 FY06 4
  5. 5. Our Journey Fiscal 2006 Fiscal 2007 Before Customer Centricity 5
  6. 6. Customer Centricity Invite Employee Ideas Honor Provide Unique End-to-End Customers Solutions 6
  7. 7. Our Priorities 1. Integrated Customer- Centric Operating Model 2. New Store Growth & Magnolia Home Theater Invite Employee 3. Services Ideas 4. Best Buy For Business Honor 5. International Provide Unique End-to-End Customers Solutions 6. Capabilities for End-To- End Solutions 7
  8. 8. Fiscal 2007 First Quarter Annual Guidance $7.0 • Revenue of $35 billion $6.1 • Comparable store sales $0.47 FY06 gain of 3% to 5% $0.34 FY07 • Earnings per diluted share of $2.65 to $2.80, an increase of Revenue ($ in Diluted EPS billions) approximately 20% • Net earnings growth of 38% • Up to 90 new stores in • SG&A rate improvement of 110 basis points North America • Revenue of $7B, comparable store sales up 4.9% 8
  9. 9. Our Growth Strategy $100 $350 New Market Growth $80 China $50 $120 Small Businesses Top-Line Services Growth Invite North Potential Employee American Market Ideas CE Market 7.0% Operating Income Bottom-Line Profitability Honor New Provide Stores, Unique IT Custome r End-to-End Customers Centricity, Supply Solutions 5.3% Service s Chain Best Buy Canada Goal Fiscal 2006 Capabilities 9
  10. 10. Kevin Layden President & Chief Operating Officer Best Buy Canada 10
  11. 11. Dual Brand Strategy Boosts Share Canadian Store Count Future Shop: $3.5B and Number of Stores Revenue •Acquired in November 2001 •Future Shop Web site is #1 consumer 44 electronics site in Canada 30 •Market share of approximately 20- 19 8 $1.4B* 22% Best Buy Canada: 118 •Opened Toronto store August 2002 114 108 104 95 •Opened stores in all major markets, including 8 bilingual stores in Montreal •Operate English and French Best Buy Web sites FY02 FY03 FY04 FY05 FY06 •Geek Squad in all stores Future S hop Best Buy Canada •Market share of approximately 8-9% 11 •As-adjusted information presents the results of operations as though Future Shop had been acquired at the beginning of fiscal 2002.
  12. 12. Evolution of the Dual Brand Strategy 2001 2009 Progress so far Three-year goals • 71% increase in • Brand differentiation store count • Business model • Revenue growth of optimization 150% through fiscal • Customer centricity 2006 • Operating income rate up 110 bps • Market share nearly doubled 12
  13. 13. Customer Centricity Invite Employee Ideas Honor Provide Unique End-to-End Customers Solutions 13
  14. 14. Brand Differentiation • Guiding principle: replicate U.S. Best Buy brand in Canadian marketplace • Future Shop brand will retain its own imagery and customer experience • Changes to dual brand operating structure • Brand architecture project initiated in late fiscal 2006 – Develop strategic framework to further differentiate the brands – Ensure clear differentiation on the customer experience and employee experience 14
  15. 15. Business Model Optimization Canadian Operating Income Rate 5.0% Gross Profit Web, Services Store 1.6% Labor Scale 15 Fiscal 2006 Goal
  16. 16. Results are Encouraging First Quarter – Canadian Results • Initial Best Buy Canada stores’ (U.S. Dollars in Millions) (Toronto and Edmonton) $797 operating profits have $626 dramatically improved $4 • Best Buy Canada’s operating FY06 profit lags Future Shop’s: FY07 ($3) – Higher advertising expense and overhead due to early stage of launch Revenue Operating Income – Maturity curve of stores (Loss) • Supply chain work beginning • Revenue growth of 27%,(US$ i comparable store sales of 7.1%* • Leveraging enterprise to • SG&A rate improvement of 110 basis improve operating income rate points • Profitable first quarter – first time in *Comparable sales percentage excludes effect of foreign seven years currency exchange 16
  17. 17. Our Growth Strategy $100 $350 New Market Growth $80 China $50 $120 Small Businesses Top-Line Services Growth Invite North Potential Employee American Market Ideas CE Market 7.0% Operating Income Bottom-Line Profitability Honor New Provide Stores, Unique IT Custome r End-to-End Customers Centricity, Supply Solutions 5.3% Service s Chain Best Buy Canada Goal Fiscal 2006 Capabilities 17
  18. 18. Your Questions 18

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