BEST BUY CO INC [BBY] Filings

10-Q 1 bby-20220730x10q.htm 10-Q bby-20220730x10q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


(Mark One)
	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 30, 2022


	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)


Minnesota		41-0907483
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

7601 Penn Avenue South
Richfield, Minnesota		55423
(Address of principal executive offices)		(Zip Code)

(612) 291-1000

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

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



Title of each class	Trading Symbol	Name of exchange on which registered
Common Stock, $0.10 par value per share	BBY	New York Stock Exchange

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. Yes  No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large Accelerated Filer 	Accelerated Filer 		Non-accelerated Filer 

Smaller Reporting Company 		Emerging Growth Company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

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

The registrant had 225,130,807 shares of common stock outstanding as of September 6, 2022.

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Table of Contents

BEST BUY CO., INC.

FORM 10-Q FOR THE QUARTER ENDED JULY 30, 2022

TABLE OF CONTENTS


Part I — Financial Information				3
Item 1.		Financial Statements		3
	a)	Condensed Consolidated Balance Sheets as of July 30, 2022, January 29, 2022, and July 31, 2021		3
	b)	Condensed Consolidated Statements of Earnings for the three and six months ended July 30, 2022, and July 31, 2021		4
	c)	Condensed Consolidated Statements of Comprehensive Income for the three and six months ended July 30, 2022, and July 31, 2021		5
	d)	Condensed Consolidated Statements of Cash Flows for the six months ended July 30, 2022, and July 31, 2021		6
	e)	Condensed Consolidated Statements of Changes in Shareholders' Equity for the three and six months ended July 30, 2022, and July 31, 2021		7
	f)	Notes to Condensed Consolidated Financial Statements		8
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations		14
Item 3.		Quantitative and Qualitative Disclosures About Market Risk		23
Item 4.		Controls and Procedures		24
Part II — Other Information				24
Item 1.		Legal Proceedings		24
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds		24
Item 6.		Exhibits		25
Signatures			26

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Table of Contents

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

Condensed Consolidated Balance Sheets

$ in millions, except per share amounts (unaudited)


	July 30, 2022		January 29, 2022		July 31, 2021
Assets
Current assets
Cash and cash equivalents	$	840	$	2,936	$	4,340
Receivables, net		840		1,042		883
Merchandise inventories		6,043		5,965		6,417
Other current assets		621		596		400
Total current assets		8,344		10,539		12,040
Property and equipment, net		2,319		2,250		2,226
Operating lease assets		2,796		2,654		2,670
Goodwill		1,385		1,384		986
Other assets		575		677		657
Total assets	$	15,419	$	17,504	$	18,579

Liabilities and equity
Current liabilities
Accounts payable	$	5,406	$	6,803	$	6,946
Unredeemed gift card liabilities		273		316		293
Deferred revenue		1,133		1,103		854
Accrued compensation and related expenses		374		845		605
Accrued liabilities		820		946		892
Short-term debt		-		-		110
Current portion of operating lease liabilities		629		648		643
Current portion of long-term debt		15		13		14
Total current liabilities		8,650		10,674		10,357
Long-term operating lease liabilities		2,221		2,061		2,090
Long-term debt		1,184		1,216		1,243
Long-term liabilities		472		533		554
Contingencies (Note 11)
Equity
Preferred stock, $1.00 par value: Authorized - 400,000 shares; Issued and outstanding - none		-		-		-
Common stock, $0.10 par value: Authorized - 1.0 billion shares; Issued and outstanding - 225.1 million, 227.4 million and 247.3 million shares, respectively		22		23		25
Additional paid-in capital		20		-		-
Retained earnings		2,522		2,668		3,975
Accumulated other comprehensive income		328		329		335
Total equity		2,892		3,020		4,335
Total liabilities and equity	$	15,419	$	17,504	$	18,579

NOTE: The Consolidated Balance Sheet as of January 29, 2022, has been condensed from the audited consolidated financial statements.

See Notes to Condensed Consolidated Financial Statements.

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Table of Contents

Condensed Consolidated Statements of Earnings

$ and shares in millions, except per share amounts (unaudited)


	Three Months Ended				Six Months Ended
	July 30, 2022		July 31, 2021		July 30, 2022		July 31, 2021
Revenue	$	10,329	$	11,849	$	20,976	$	23,486
Cost of sales		8,042		9,039		16,336		17,961
Gross profit		2,287		2,810		4,640		5,525
Selling, general and administrative expenses		1,882		2,009		3,772		3,997
Restructuring charges		34		4		35		(38)
Operating income		371		797		833		1,566
Other income (expense):
Investment income (loss) and other		3		3		(2)		6
Interest expense		(7)		(6)		(13)		(12)
Earnings before income tax expense and equity in income (loss) of affiliates		367		794		818		1,560
Income tax expense		58		64		168		236
Equity in income (loss) of affiliates		(3)		4		(3)		5
Net earnings	$	306	$	734	$	647	$	1,329

Basic earnings per share	$	1.36	$	2.93	$	2.86	$	5.28
Diluted earnings per share	$	1.35	$	2.90	$	2.85	$	5.22

Weighted-average common shares outstanding:
Basic		225.4		250.2		226.1		251.7
Diluted		226.1		252.8		227.2		254.7

See Notes to Condensed Consolidated Financial Statements.

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Table of Contents

Condensed Consolidated Statements of Comprehensive Income

$ in millions (unaudited)


	Three Months Ended				Six Months Ended
	July 30, 2022		July 31, 2021		July 30, 2022		July 31, 2021
Net earnings	$	306	$	734	$	647	$	1,329
Foreign currency translation adjustments, net of tax		-		(3)		(1)		7
Comprehensive income	$	306	$	731	$	646	$	1,336

See Notes to Condensed Consolidated Financial Statements.

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Table of Contents

Condensed Consolidated Statements of Cash Flows

$ in millions (unaudited)


	Six Months Ended
	July 30, 2022		July 31, 2021
Operating activities
Net earnings	$	647	$	1,329
Adjustments to reconcile net earnings to total cash provided by (used in) operating activities:
Depreciation and amortization		453		430
Restructuring charges		35		(38)
Stock-based compensation		65		71
Other, net		19		2
Changes in operating assets and liabilities, net of acquired assets and liabilities:
Receivables		201		175
Merchandise inventories		(79)		(794)
Other assets		(13)		(19)
Accounts payable		(1,434)		(58)
Income taxes		42		(162)
Other liabilities		(645)		(72)
Total cash provided by (used in) operating activities		(709)		864

Investing activities
Additions to property and equipment		(441)		(323)
Purchases of investments		(46)		(93)
Sales of investments		2		60
Other, net		1		(2)
Total cash used in investing activities		(484)		(358)

Financing activities
Repurchase of common stock		(465)		(1,323)
Dividends paid		(397)		(350)
Other, net		1		11
Total cash used in financing activities		(861)		(1,662)

Effect of exchange rate changes on cash and cash equivalents

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