What changed in this filing

/stocks — the workspaceLOADING

Item 5. Market for Registrant’s Common Equity

2022-03-18 compared with 2021-03-19 · 171 added, 240 removed, 314 unchanged (57% of the section changed)

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Market Information and Dividends

Our common stock is traded on the New York Stock Exchange ("NYSE") under the ticker symbol BBY.

Our common stock is traded on the New York Stock Exchange (“NYSE”) under the ticker symbol BBY.

In fiscal 2004, our Board initiated the payment of a regular quarterly cash dividend with respect to shares of our common stock.

A quarterly cash dividend has been paid in each subsequent quarter.

On February 25, 2021 , we announced an increase in our regular quarterly dividend from $0.55 per share to $0.70 per share.

On March 3, 2022 , we announced an increase in our regular quarterly dividend from $0.70 per share to $0.88 per share.

Future dividend payments will depend on our earnings, capital requirements, financial condition and other factors considered relevant by our Board.

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Purchases of Equity Securities by the Issuer and Affiliated Purchasers

On February 23, 2019, our Board authorized a $3.0 billion share repurchase program.

On February 16, 2021, our Board approved a new $5.0 billion share repurchase program, replacing the existing program, which had $1.7 billion remaining available for repurchases as of January 30, 2021.

On February 16, 2021, our Board approved a $5.0 billion share repurchase program.

On February 28, 2022, our Board approved a new $5.0 billion share repurchase authorization, replacing the then-existing program, which had $1.6 billion remaining available for repurchases as of January 29, 2022.

There is no expiration date governing the period over which we can repurchase shares under this authorization.

We temporarily suspended all share repurchases from March to November of fiscal 2021 to conserve liquidity in light of COVID-19-related uncertainties.

During fiscal 2021 we repurchased and retired 3.1 million shares at a cost of $318 million.

During fiscal 2022, we repurchased and retired 32.2 million shares at a cost of $3.5 billion.

On March 3, 2022, we announced our plans to spend approximately $1.5 billion on share repurchases in fiscal 2023.

Between the end of fiscal 2022 on January 29, 2022, and March 16, 2022, we repurchased an incremental 2.4 million shares of our common stock at a cost of $239 million.

On February 25, 2021, we announced our plans to spend at least $2 billion on share repurchases in fiscal 2022.

The following table presents information regarding our repurchases of common stock during the fourth quarter of fiscal 2021:

Fiscal Period

For additional information, see “Share Repurchases and Dividends” in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations , and Note 9, Shareholders’ Equity , of the Notes to Consolidated Financial Statements, included in Item 8, Financial Statements and Supplementary Data , of this Annual Report on Form 10-K.

Information regarding our repurchases of common stock during the fourth quarter of fiscal 2022 was as follows:

Average Price

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‎ Purchased as Part of Publicly Announced Program

Approximate Value

Approximate Dollar Value

‎ of Shares that May Yet Be

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1,615,616,656

(1) At the beginning of the fourth quarter of fiscal 2021, there was $1.9 billion available for share repurchases under our February 2019 $3.0 billion share repurchase program.

The "Approximate Value of Shares that May Yet Be Purchased Under the Program"

column reflects the $262 million we purchased in the fourth quarter of fiscal 2021 pursuant to such program.

Share repurchases prior to February 16, 2021, will be made under our February 2019 $3.0 billion share repurchase program and thereafter will be made under our February 2021 $5.0 billion share repurchase program.

For additional information, see Note 9, Shareholders'

Equity , of the Notes to the Consolidated Financial Statements included in Item 8, Financial Statements and Supplementary Data , of this Annual Report on Form 10-K.

(1) On February 28, 2022, our Board approved a new $5.0 billion share repurchase authorization, replacing the existing program approved in February 2021.

Share repurchases prior to February 28, 2022, will be made under the February 2021 share repurchase program and thereafter will be made under our February 2022 share repurchase program.

Best Buy Stock Comparative Performance Graph

The information contained in this Best Buy Stock Comparative Performance Graph section shall not be deemed to be "soliciting material"

or "filed"

or incorporated by reference in future filings with the SEC, or subject to the liabilities of Section 18 of the Exchange Act, except to the extent that we specifically incorporate it by reference into a document filed under the Securities Act or the Exchange Act.

The graph below compares the cumulative total shareholder return on our common stock for the last five fiscal years with the cumulative total return on the Standard & Poor's 500 Index ("S&P 500"), of which we are a component, and the Standard & Poor's Retailing Group Industry Index ("S&P Retailing Group"), of which we are also a component.

The information contained in this Best Buy Stock Comparative Performance Graph section shall not be deemed to be “soliciting material” or “filed” or incorporated by reference in future filings with the SEC, or subject to the liabilities of Section 18 of the Exchange Act, except to the extent that we specifically incorporate it by reference into a document filed under the Securities Act or the Exchange Act.

The graph below compares the cumulative total shareholder return on our common stock for the last five fiscal years with the cumulative total return on the Standard & Poor's 500 Index (“S&P 500”), of which we are a component, and the Standard & Poor's Retailing Group Industry Index (“S&P Retailing Group”), of which we are also a component.

The S&P Retailing Group is a capitalization-weighted index of domestic equities traded on the NYSE and NASDAQ and includes high-capitalization stocks representing the retail sector of the S&P 500.

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January 28, 2017

February 3, 2018

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January 30, 2021

January 29, 2022

Best Buy Co., Inc.

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Research Data Group, Inc.

Selected Financial Data.

The following table presents our selected financial data.

The table should be read in conjunction with Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations , and Item 8, Financial Statements and Supplementary Data , of this Annual Report on Form 10-K.

Five-Year Financial Highlights

$ in millions, except per share amounts

Consolidated Statements of Earnings Data

Operating income

Net earnings from continuing operations

Gain from discontinued operations

Per Share Data

Diluted net earnings from continuing operations

Net gain from discontinued operations

Diluted net earnings

Cash dividends declared and paid

Operating Statistics

Comparable sales growth (3)

Gross profit rate

Selling, general and administrative expenses rate

Operating income rate

Year-End Data

Current ratio (4)

Debt, including current portion

Number of stores:

International

Retail square footage (in thousands):

International

(1) In the first quarter of fiscal 2020, we adopted new lease accounting guidance that resulted in the recognition of operating lease assets and operating lease liabilities on the balance sheet.

Refer to Note 1, Summary of Significant Accounting Policies , and Note 7, Leases , of the Notes to Consolidated Financial Statements, included in Item 8, Financial Statements and Supplementary Data , of this Annual Report on Form 10-K, for additional information regarding our leases.

(2) Fiscal 2018 included 53 weeks.

All other periods presented included 52 weeks.

(3) In the first quarter of fiscal 2020, we refined our methodology for calculating comparable sales.

It now reflects certain revenue streams previously excluded from the comparable sales calculation, such as credit card revenue, gift card breakage, commercial sales and sales of merchandise to wholesalers and dealers, as applicable.

The impact of adopting these changes is immaterial to all periods presented, and therefore prior-period comparable sales disclosures have not been restated.

Refer to Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations , of this Annual Report on Form 10-K, for additional information regarding our comparable sales calculation.

(4) The current ratio is calculated by dividing total current assets by total current liabilities.

(5) Includes Best Buy Outlet Centers for all fiscal years presented.

Management's Discussion and Analysis of Financial Condition and Results of Operations.

Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to provide a reader of our financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity and certain other factors that may affect our future results.

Management's Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to provide a reader of our financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity and certain other factors that may affect our future results.

Unless otherwise noted, transactions and other factors significantly impacting our financial condition, results of operations and liquidity are discussed in order of magnitude.

Our MD&A should be read in conjunction with the Consolidated Financial Statements and related Notes included in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K.

Refer to Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, in our Form 10-K for the fiscal year ended February 1, 2020, for discussion of the results of operations for the year ended February 1, 2020, compared to the year ended February 2, 2019, which is incorporated by reference herein.

Our purpose is to enrich lives through technology.

Refer to Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, in our Form 10-K for the fiscal year ended January 30, 2021, for discussion of the results of operations for the year ended January 30, 2021, compared to the year ended February 1, 2020, which is incorporated by reference herein.

We are driven by our purpose to enrich lives through technology and our vision to personalize and humanize technology solutions for every stage of life .

We accomplish this by leveraging our combination of technology and a human touch to meet our customers’ everyday needs, whether they come to us online, visit our stores or invite us into their homes.

We have operations in the U.S.

We have two reportable segments:

Domestic and International.

The Domestic segment is comprised of the operations, including our Best Buy Health business, in all states, districts and territories of the U.S.

under various brand names including Best Buy, Best Buy Business, Best Buy Express, Best Buy Health, CST, Geek Squad, GreatCall, Lively, Magnolia and Pacific Kitchen and Home and the domain names bestbuy.com and greatcall.com.

The International segment is comprised of all operations in Canada and Mexico under the brand names Best Buy, Best Buy Express, Best Buy Mobile and Geek Squad and the domain names bestbuy.ca and bestbuy.com.mx.

During the third quarter of fiscal 2021 we made the decision to exit our operations in Mexico.

Refer to Note 2, Restructuring , of the Notes to Consolidated Financial Statements, included in Item 8, Financial Statements and Supplementary Data , of this Annual Report on Form 10-K for additional information.

The Domestic segment is comprised of our operations in all states, districts and territories of the U.S.

and our Best Buy Health business, and includes the brand names Best Buy, Best Buy Ads, Best Buy Business, Best Buy Health, CST, Current Health, Geek Squad, Lively, Magnolia, Pacific Kitchen and Home and Yardbird and the domain names bestbuy.com, currenthealth.com, lively.com and yardbird.com.

All of our former stores in Mexico were closed as of the end of the first quarter of fiscal 2022, and our International segment is now comprised of all operations in Canada under the brand names Best Buy, Best Buy Mobile and Geek Squad and the domain name bestbuy.ca.

Our fiscal year ends on the Saturday nearest the end of January.

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Our business, like that of many retailers, is seasonal.

A large proportion of our revenue and earnings is generated in the fiscal fourth quarter, which includes the majority of the holiday shopping season in the U.S., Canada and Mexico.

A large proportion of our revenue and earnings is generated in the fiscal fourth quarter, which includes the majority of the holiday shopping season.

Comparable Sales

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Comparable sales includes revenue from stores, websites and call centers operating for at least 14 full months.

Stores closed more than 14 days, including but not limited to relocated, remodeled, expanded and downsized stores, or stores impacted by natural disasters, are excluded from comparable sales until at least 14 full months after reopening.

Acquisitions are included in comparable sales beginning with the first full quarter following the first anniversary of the date of the acquisition.

Revenue from online sales is included in comparable sales and represents sales initiated on a website or app, regardless of whether customers choose to pick up product in store, curbside, at an alternative pick-up location or take delivery direct to their homes.

Revenue from acquisitions is included in comparable sales beginning with the first full quarter following the first anniversary of the date of the acquisition.

Comparable sales also includes credit card revenue, gift card breakage, commercial sales and sales of merchandise to wholesalers and dealers, as applicable.

Revenue from stores closed more than 14 days, including but not limited to relocated, remodeled, expanded and downsized stores, or stores impacted by natural disasters, is excluded from comparable sales until at least 14 full months after reopening.

Comparable sales excludes the impact of revenue from discontinued operations and the effect of fluctuations in foreign currency exchange rates (applicable to our International segment only).

Online sales are included in comparable sales.

Online sales represent those initiated on a website or app, regardless of whether customers choose to pick up product in store, curbside, at an alternative pick-up location or take delivery direct to their homes.

All periods presented apply this methodology consistently.

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As a result, all revenue from Mexico operations has been excluded from our comparable sales calculation beginning in December of fiscal 2021.

On March 1, 2018, we announced our intent to close all of our 257 remaining Best Buy Mobile stand-alone stores in the U.S.

As a result, all revenue related to these stores has been excluded from our comparable sales calculation beginning in March 2018.

On October 1, 2018, we acquired all outstanding shares of GreatCall, Inc.

(“GreatCall”) and on May 9, 2019, we acquired all outstanding shares of Critical Signal Technologies, Inc.

Consistent with our comparable sales policy, the results of GreatCall are included in our comparable sales calculation beginning in the fourth quarter of fiscal 2020, and the results of CST are included in our comparable sales calculation beginning in the third quarter of fiscal 2021.

On May 9, 2019, we acquired all outstanding shares of Critical Signal Technologies, Inc.

On November 2, 2021, we acquired all outstanding shares of Current Health Ltd.

(“Current Health”).

On November 4, 2021, we acquired all outstanding shares of Two Peaks, LLC d/b/a Yardbird Furniture (“Yardbird”) .

Consistent with our comparable sales policy, the results of CST were included in our comparable sales calculation beginning in the third quarter of fiscal 2021, and the results of Current Health and Yardbird are excluded from our comparable sales calculation until the first quarter of fiscal 2024.

We believe comparable sales is a meaningful supplemental metric for investors to evaluate revenue performance resulting from growth in existing stores, websites and call centers versus the portion resulting from opening new stores or closing existing stores.

The method of calculating comparable sales varies across the retail industry.

As a result, our method of calculating comparable sales may not be the same as other retailers'

As a result, our method of calculating comparable sales may not be the same as other retailers’ methods.

Non-GAAP Financial Measures

This MD&A includes financial information prepared in accordance with accounting principles generally accepted in the United States ("GAAP"), as well as certain adjusted or non-GAAP financial measures, such as constant currency, non-GAAP operating income, non-GAAP effective tax rate and non-GAAP diluted earnings per share ("EPS").

This MD&A includes financial information prepared in accordance with accounting principles generally accepted in the U.S.

(“GAAP”), as well as certain adjusted or non-GAAP financial measures, such as constant currency, non-GAAP operating income, non-GAAP effective tax rate and non-GAAP diluted earnings per share (“EPS”).

We believe that non-GAAP financial measures, when reviewed in conjunction with GAAP financial measures, can provide more information to assist investors in evaluating current period performance and in assessing future performance.

For these reasons, our internal management reporting also includes non-GAAP financial measures.

Generally, our non-GAAP financial measures include adjustments for items such as restructuring charges, goodwill impairments, price-fixing settlements, gains and losses on investments, intangible asset amortization, certain acquisition-related costs and the tax effect of all such items.

Generally, our non-GAAP financial measures include adjustments for items such as restructuring charges, goodwill and intangible impairments, price-fixing settlements, gains and losses on certain investments, intangible asset amortization, certain acquisition-related costs and the tax effect of all such items.

In addition, certain other items may be excluded from non-GAAP financial measures when we believe doing so provides greater clarity to management and our investors.

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dollars for reporting purposes.

We also may use the term "constant currency,"

which represents results adjusted to exclude foreign currency impacts.

We also may use the term “constant currency,” which represents results adjusted to exclude foreign currency impacts.

We calculate those impacts as the difference between the current period results translated using the current period currency exchange rates and using the comparable prior period currency exchange rates.

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Refer to the Non-GAAP Financial Measures section below for detailed reconciliations of items impacting non-GAAP operating income, non-GAAP effective tax rate and non-GAAP diluted EPS in the presented periods.

Business Strategy and COVID-19 Update

In fiscal 2021 our Enterprise comparable sales grew 9.7% as we leveraged our unique capabilities, including our supply chain expertise, flexible store operating model and ability to shift quickly to digital, to meet what was clearly elevated demand for products that help customers work, learn, cook, entertain and connect in their homes.

We provided customers with multiple options for how, when and where they shopped with us to ensure it satisfied their need for safety and convenience.

The pandemic environment underscored our purpose to enrich lives through technology, and the capabilities we strengthened in fiscal 2021 will benefit us going forward as we execute our strategy.

Our strong financial performance allowed us to share our success with the community, our shareholders, and, importantly, our employees.

In the third quarter of fiscal 2021, we made a $40 million donation to the Best Buy Foundation to accelerate the progress towards our goal to reach 100 Teen Tech Centers across the U.S.

We believe our Teen Tech Centers help to further our commitments towards economic and social justice in our communities by making a measurable difference in the lives of underserved teens who may not otherwise have access to technology.

In addition, we resumed our share repurchase program during the fourth quarter of fiscal 2021 and increased our quarterly dividend by 27% to $0.70 per share.

For our employees, we provided hourly appreciation pay for those who were working on the frontlines, paid recognition bonuses to field employees and established multiple hardship funds for anyone impacted physically, emotionally or financially by COVID-19.

Starting August 1, 2020, we also raised our starting wage to $15 per hour for all domestic employees and enhanced our employee benefits.

Throughout the pandemic and across all the ways customers can shop, we adhered to safety protocols that limited store capacity, followed strict social distancing practices and used proper protective equipment, including requiring our employees and customers to wear masks.

This COVID-19 pandemic and the shift in customer buying behavior underscores the importance of our strong multi-channel capabilities.

In fiscal 2021 our Domestic online revenue grew 144% compared to last year.

We believe it is essential to provide options that let customers choose what works best for them.

To best serve our customers during the pandemic, we had to be innovative and flexible.

Early in the year, we quickly rolled out enhanced curbside pick-up across our stores to provide our customers convenience when we made the difficult decision to close our stores in March 2020.

In May 2020 we developed an in-store appointment model that provided our customers with an option to shop in our stores as we prepared to open stores back up to customer shopping.

We developed solutions like virtual consultations with advisors and video chats with our store associates.

In addition, we made significant improvements to the functionality and customer experience of our app to support shopping, support and fulfillment.

We provided fulfillment options that customers have come to expect from all retailers like fast and free home delivery, in-store pick-up and curbside pick-up.

As we look forward, the environment is still evolving, and our operating model and supporting cost structure are evolving as well.

The pandemic has accelerated the evolution of retail and compelled us to change our operating model in the best interest of our employees and customers.

We have also expedited some planned strategic changes that we believe will allow us to emerge from this time even stronger.

During the third quarter of fiscal 2021 we made the difficult decision to exit our operations in Mexico and began taking other actions to more broadly align our organizational structure in support of our strategy.

As a result, we recorded $144 million of charges in our International segment in fiscal 2021, including $23 million of inventory markdowns within cost of sales and $121 million within restructuring charges primarily comprised of asset impairments, currency translation adjustments and termination benefits.

As of January 30, 2021, the exit was substantially complete and we do not expect to incur material future restructuring charges in fiscal 2022 related to the exit.

We also recorded $133 million of restructuring charges in our Domestic segment in fiscal 2021, primarily related to termination benefits associated with field and corporate organizational changes in support of our strategy, as well as impairments of technology assets held in service of our Mexico operations.

As we continue to evolve our Building the New Blue Strategy, it is possible that we will incur material future restructuring costs, but we are unable to forecast the timing and magnitude of such costs.

We believe the following will be permanent and structural implications of the pandemic relevant to Best Buy:

Business Strategy Update

In fiscal 2022, we delivered record revenue and earnings.

Our leaders continued to drive new ways of operating, and our employees continued to support our customers’ technology needs in knowledgeable, fast and convenient ways in the face of unprecedented challenges and change.

As we entered the year, we anchored on three concepts we believed to be permanent and structural implications of the pandemic that were, and are, shaping our strategic priorities and investments:

Customer shopping behavior will be permanently changed in a way that is even more digital and puts customers entirely in control to shop how they want.

Our strategy is to embrace that reality, and lead, not follow.

• Our workforce will need to evolve in a way that meets the needs of customers while also providing more flexible opportunities for our people.

• Technology is playing an even more crucial role in people’s lives, and, as a result, our purpose to enrich lives through technology has never been more important.

Said differently, people are using technology to address their needs in ways they never contemplated before, and we play a vital role in bringing technology to life for both customers and our vendor partners.

These implications are extensive and interdependent, and we are, as quickly as possible, both implementing change today and assessing future changes across our entire business, including how we evolve our stores and labor model, and how we spend our investment dollars.

In summary, during fiscal 2021 we managed through the challenging environment in a way that allowed us to accelerate many aspects of our strategy to deliver on our purpose.

Our teams showed perseverance and commitment through the year and collectively changed the way we do business at a pace we never imagined.

Our strategy is to embrace that reality, and to lead, not follow.

Our workforce will need to evolve in a way that meets the needs of customers while we provide more flexible opportunities for our employees.

Technology is a need and is playing an even more crucial role in peoples’ lives, and, as a result, our purpose to enrich lives through technology has never been more important.

With these concepts in mind, we piloted numerous store formats to test and learn in the past year.

We advanced our flexible workforce initiative and invested in our employees’ well-being and we introduced new technology tools designed to support both our customers and our employees.

We also launched a bold new membership program called Best Buy Totaltech, designed to significantly elevate our customer experience and drive incremental sales.

Totaltech leverages our strengths across merchandising, fulfillment, installation, tech support and product repair and is designed to give our customers the confidence that whatever their technology needs are, we will be there to help.

Members receive product discounts and priority access to certain in-demand products, free delivery and standard installation, free technical support, up to 24 months of product protection on most purchases with active membership and other benefits.

While this new offering introduces pressure to our near-term profitability, we believe Totaltech is a membership experience that customers will love, and in turn, will generate a higher customer lifetime value and drive a larger share of consumer electronics spending to Best Buy.

All of this was advanced against a constantly evolving backdrop.

During the year we navigated supply chain and transportation challenges, uncertainty as COVID-19 peaks rolled across the country and then, most recently, the disruption from the COVID-19 Omicron wave.

Our teams have expertly managed supply chain challenges since the beginning of the pandemic to bring in products our customers needed.

During the year, we continued serving our customers digitally at much higher rates than before the pandemic.

Our online revenue was 34% of our Domestic revenue, compared to 43% last year and 19% two years ago.

And while online revenue declined compared to last year, it was up 115%, or $8.8 billion, compared to two years ago.

At the same time, we reached our fastest package delivery speeds.

The percent of online orders we delivered in one day was twice as high as pre-pandemic levels, despite the significant increase in volume during that same timeframe.

These strong results were driven by the investment decisions we have made in the last several years in our supply chain, store operations, our people and technology.

More importantly, these results are driven by our employees across the company.

Over the past 24 months, they have flexibly dealt with rapidly changing store operations as we responded to impacts of the pandemic, created safe environments for our customers and worked tirelessly to provide excellent service.

In fact, despite all the changes throughout the year, we delivered customer satisfaction improvements both online and in our stores.

As we look to the future, we view technology as a permanent and growing need in the home, and we expect technology to constantly evolve as the world's largest technology companies continue to innovate.

We are investing now to ensure we pivot to meet the needs of our customers, helping enrich their lives through technology in ways we believe no one else can and retaining our unique position in our industry.

Results of Operations

In order to align our fiscal reporting periods and comply with statutory filing requirements, we consolidate the financial results of our Mexico operations on a one-month lag.

Consistent with such consolidation, the financial and non-financial information presented in our MD&A relative to these operations is also presented on a lag.

Our policy is to accelerate the recording of events occurring in the lag period that significantly affect our consolidated financial statements.

Other than the restructuring charges incurred related to our decision to exit our operations in Mexico, no such events were identified for the periods presented.

Consolidated Results

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Consolidated Performance Summary

Revenue % increase

Comparable sales growth

Revenue % change

Comparable sales % change

Gross profit as a % of revenue (1)

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In fiscal 2022, we generated $51.8 billion in revenue and our comparable sales increased 10.4%.

The impact of the pandemic drove strong customer demand for products to help them work, learn, cook, entertain and connect in their homes.

Our strong sales performance resulted in operating income rate expansion of 50 basis points compared to fiscal 2020.

Revenue, gross profit rate, SG&A rate and operating income rate changes in fiscal 2021 were primarily driven by our Domestic segment.

For further discussion of each segment's rate changes, see Segment Performance Summary, below.

We continued to experience elevated demand for technology products and services throughout most of the year, as consumers continued to leverage technology to meet their needs, and we provided solutions that help them work, learn, entertain, cook and connect at home.

Our performance resulted in an operating income rate increase of 0.8% compared to fiscal 2021.

Revenue, SG&A and operating income rate changes in fiscal 2022 were primarily driven by our Domestic segment.

The gross profit rate change in fiscal 2022 was primarily driven by our International segment.

For further discussion of each segment’s rate changes, see Segment Performance Summary , below.

Segment Performance Summary

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Domestic Segment Performance Summary

Revenue % increase

Comparable sales growth (1)

Revenue % change

Comparable sales % change (1)

Gross profit as a % of revenue

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Online revenue as a % of total segment revenue

Comparable online sales growth (1)

Comparable online sales % change (1)

(1) Comparable online sales are included in the comparable sales calculation.

The increase in revenue in fiscal 2022 was primarily driven by the comparable sales growth across most of our product categories, partially offset by the loss of revenue from permanent store closures in the past year.

Online revenue of $18.7 billion increased 144.4% on a comparable basis in fiscal 2021, primarily due to higher conversion rates and increased traffic as we saw a channel shift in our customer shopping behavior as a result of COVID-19.

Domestic segment stores open at the end of each of the last three fiscal years, excluding stores that were temporarily closed as a result of COVID-19 in fiscal 2021, were as follows:

Online revenue of $16.4 billion decreased 12.0% on a comparable basis in fiscal 2022, primarily due to channel shifts in customer shopping behavior as a result of the evolution of the COVID-19 pandemic.

Domestic segment stores open at the end of each of the last three fiscal years were as follows:

‎ Fiscal Year

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Total Domestic segment stores

We continuously monitor store performance.

As we approach the expiration date of our leases, we evaluate various options for each location, including whether a store should remain open.

(1) Excludes stores that were temporarily closed as a result of COVID-19.

We continuously monitor store performance as part of a market-driven, omnichannel strategy.

As we approach the expiration of leases, we evaluate various options for each location, including whether a store should remain open.

We currently expect to close approximately 20 to 30 Best Buy stores annually through fiscal 2025, consistent with prior-year trends.

We also expect to increase the number of Outlet Centers to approximately 30 by the end of fiscal 2023.

Domestic segment revenue mix percentages and comparable sales percentage changes by revenue category were as follows:

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Entertainment

Continued strong demand in categories that help our customers work, learn, cook, entertain and connect from home contributed to our Domestic comparable sales changes across most of our categories.

Notable comparable sales changes by revenue category were as follows:

• Computing and Mobile Phones:

The 13.0% comparable sales growth was driven primarily by computing, tablets and networking, partially offset by declines in mobile phones.

The 5.1% comparable sales growth was driven primarily by computing, mobile phones and wearables, partially offset by a comparable sales decline in networking.

• Consumer Electronics:

The 0.2% comparable sales decline was driven primarily by headphones and digital imaging, partially offset by growth in home theater.

The 15.9% comparable sales growth was driven primarily by home theater, headphones and portable speakers and digital imaging.

• Appliances:

The 23.2% comparable sales growth was driven by both large and small appliances.

The 24.1% comparable sales growth was driven primarily by large appliances.

• Entertainment:

The 17.9% comparable sales growth was driven primarily by gaming and virtual reality, partially offset by declines in movies.

The 1.4% comparable sales decline was primarily driven by our repair, delivery and installation services.

Our gross profit rate decreased in fiscal 2021 primarily due to higher supply chain costs as a result of the increased mix of online revenue and lower profit-sharing revenue from our private label and co-branded credit card arrangement , partially offset by a more favorable promotional environment.

Our SG&A decreased in fiscal 2021 primarily due to lower store payroll expense and other actions taken at the onset of the pandemic, such as the temporary suspension of the 401(k) employer match, reduced advertising and lower store overhead expenses.

These decreases were partially offset by increases in variable costs associated with higher sales volume and a $40 million donation to the Best Buy Foundation.

Lower store payroll expense was primarily due to fewer labor hours as a result of reduced store operating hours, lower store-generated revenue and efficiencies in our labor model, which was partially offset by increased wage rates.

SG&A also includes $81 million of employee retention credits as a result of the Federal Coronavirus Aid, Relief and Economic Security (CARES) Act.

Restructuring charges in fiscal 2021 related to termination benefits associated with actions taken to more broadly align our organizational structure in support of our strategy.

The 7.4% comparable sales growth was driven primarily by virtual reality.

The 5.9% comparable sales growth was driven primarily by membership offerings.

Our gross profit rate decreased in fiscal 2022, primarily driven by lower services margin rates, which included pressure associated with our Totaltech membership offering that includes incremental customer benefits, and associated costs, compared to our previous Total Tech Support offer.

The decrease was partially offset by higher profit-sharing revenue from our private label and co-branded credit card arrangement and improved product margins.

Our SG&A increased in fiscal 2022, primarily due to higher short-term incentive compensation, technology investments, advertising expenses and store payroll expenses, which included $81 million of employee retention credits in the prior-year period as a result of the Federal Coronavirus Aid, Relief and Economic Security Act.

This was partially offset by the impact of a $40 million donation to the Best Buy Foundation in the prior year.

The restructuring credit in fiscal 2022 was primarily related to subsequent adjustments to termination benefits resulting from changes in our previously planned organizational changes and higher-than-expected retention rates.

Refer to Note 3, Restructuring , of the Notes to Consolidated Financial Statements, included in Item 8, Financial Statements and Supplementary Data , of this Annual Report on Form 10-K for additional information.

Our operating income rate increased in fiscal 2021 primarily driven by increased leverage from higher sales volume on our fixed expenses, which resulted in favorable SG&A rates, partially offset by the decrease in gross profit rate and restructuring charges described above.

Our operating income rate increased in fiscal 2022, primarily driven by increased leverage from higher sales volume on our fixed expenses, which resulted in a favorable SG&A rate, and lower restructuring charges, partially offset by the unfavorable gross profit rate described above.

International Segment

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Operating income as a % of revenue

The increase in revenue in fiscal 2021 was primarily driven by comparable sales growth across most of our product categories, partially offset by the negative impact of foreign currency exchange rate fluctuations related to our operations in Mexico and Canada, and lower revenue in Mexico as a result of our decision in the third quarter of fiscal 2021 to exit operations.

International segment stores open at the end of each of the last three fiscal years, excluding stores that were temporarily closed as a result of COVID-19 in fiscal 2021, were as follows:

The decrease in revenue in fiscal 2022 was primarily driven by lower revenue in Mexico as a result of our decision in fiscal 2021 to exit operations, partially offset by favorable foreign currency exchange fluctuations and comparable sales growth across most of our product categories in Canada.

International segment stores open at the end of each of the last three fiscal years were as follows:

‎ Fiscal Year

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Total International segment stores

(1) Excludes stores that were temporarily closed as a result of COVID-19.

International segment revenue mix percentages and comparable sales percentage changes by revenue category were as follows:

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Entertainment

Similar to the Domestic segment, strong demand in categories that help our customers work, learn, cook, entertain and connect from home contributed to our International comparable sales changes across most of our categories.

Notable comparable sales changes by revenue category were as follows:

• Computing and Mobile Phones :

The 23.8% comparable sales growth was driven primarily by computing, tablets and networking, partially offset by declines in mobile phones.

The 1.6% comparable sales growth was driven primarily by mobile phones, partially offset by a comparable sales decline in tablets.

• Consumer Electronics:

The 0.3% comparable sales growth was driven primarily by home theater and health and fitness, partially offset by declines in smart home and digital imaging.

The 4.0% comparable sales growth was driven primarily by home theater and health and fitness, partially offset by a comparable sales decline in portable speakers.

• Appliances:

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• Entertainment:

The 52.1% comparable sales growth was driven primarily by gaming and virtual reality.

The 11.0% comparable sales decline was driven primarily by warranty and repair services.

The 9.4% comparable sales growth was driven primarily by baby products.

Our gross profit rate declined in fiscal 2021 primarily due to operations in Canada, which was largely driven by higher supply chain costs as a result of the increased mix of online revenue and a lower mix of higher margin services revenue.

Gross profit also decreased $23 million as a result of inventory markdowns associated with our decision to exit our operations in Mexico.

Our SG&A decreased in fiscal 2021 primarily due to operations in Canada as a result of lower store payroll expense, partially offset by higher incentive compensation.

Restructuring charges in fiscal 2021 primarily related to asset impairments, currency translation adjustments and termination benefits associated with our decision to exit our operations in Mexico.

The 3.5% comparable sales growth was driven primarily by virtual reality, partially offset by a comparable sales decline in gaming.

The 7.9% comparable sales growth was driven primarily by warranty services.

The 8.8% comparable sales growth was driven primarily by sporting goods.

Our gross profit rate increased in fiscal 2022, primarily driven by improved product margin rates in Canada and sales mixing out of Mexico, which had a lower gross profit rate than Canada.

The increases were also driven by higher inventory markdowns in the prior year associated with our decision to exit operations in Mexico.

Our SG&A in fiscal 2022 was flat compared to fiscal 2021, primarily due to the unfavorable impact of foreign currency rates and increased store payroll and incentive compensation expenses in Canada, offset by lower expenses in Mexico as a result of our decision to exit operations there.

The restructuring charges in fiscal 2022 related to our decision to exit operations in Mexico.

Our operating income rate decreased in fiscal 2021 primarily driven by restructuring charges and the lower gross profit rate described above, partially offset by a favorable SG&A rate driven by increased leverage from higher sales volume on our fixed expenses.

Our operating income rate increased in fiscal 2022, primarily driven by lower restructuring charges and the increase in gross profit rate described above.

Additional Consolidated Results

Other Income (Expense)

Our investment income and other decreased in fiscal 2021 primarily due to less favorable interest rates on our investments, partially offset by an increase in the fair value of a minority equity investment.

Interest expense decreased in fiscal 2021 primarily due to more favorable interest rates related to our interest rate swap contracts, partially offset by an increase in interest expense as a result of our short-term draw on our $1.25 billion five-year senior unsecured revolving credit facility.

Refer to Note 8, Debt, of the Notes to Consolidated Financial Statements, included in Item 8, Financial Statements and Supplementary Data , of this Annual Report on Form 10-K for additional information regarding our revolving credit facility.

Income Tax Expense

Income tax expense increased in fiscal 2021 primarily due to an increase in pre-tax earnings.

Our effective tax rate increased in fiscal 2021 primarily due to an increase in losses for which tax benefits were not recognized, a decrease in the tax benefit from stock-based compensation and the impact of higher pre-tax earnings on discrete tax benefits, partially offset by an increase in the tax benefit from federal tax credits and the resolution of discrete tax matters.

Income tax expense decreased in fiscal 2022, primarily due to multi-jurisdiction, multi-year non-cash benefits from the resolution of certain discrete tax matters, partially offset by the impact of increased pre-tax earnings.

Our effective tax rate decreased in fiscal 2022, primarily due to these non-cash benefits from the resolution of certain discrete tax matters, as well as a decrease in losses for which tax benefits were not recognized.

Non-GAAP Financial Measures

Reconciliations of operating income, effective tax rate and diluted EPS (GAAP financial measures) to non-GAAP operating income, non-GAAP effective tax rate and non-GAAP diluted EPS (non-GAAP financial measures) were as follows ($ in millions, except per share amounts):

Reconciliations of operating income, effective tax rate and diluted EPS (GAAP financial measures) to non-GAAP operating income, non-GAAP effective tax rate and non-GAAP diluted EPS (non-GAAP financial measures), respectively, were as follows ($ in millions, except per share amounts):

Operating income

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Acquisition-related transaction costs (3)

Tax reform-related item - employee bonus (5)

Non-GAAP operating income

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Gain on investments, net (5)

Tax reform - repatriation tax (5)

Tax reform - deferred tax rate change (5)

Non-GAAP effective tax rate

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Restructuring charges (4)

Gain on investments, net (6)

Acquisition-related transaction costs (3)

Tax reform-related item - employee bonus (5)

Tax reform - repatriation tax (5)

Tax reform - deferred tax rate change (5)

Gain on investments, net (5)

Income tax impact of non-GAAP adjustments (6)

Non-GAAP diluted EPS

For additional information regarding the nature of charges discussed below, refer to Note 2, Restructuring ;

Note 3, Acquisitions ;

For additional information regarding the nature of charges discussed below, refer to Note 2, Acquisitions ;

Note 3, Restructuring ;

Note 4, Goodwill and Intangible Assets ;

Note 6, Derivative Instruments ;

and Note 11, Income Taxes , of the Notes to Consolidated Financial Statements, included in Item 8, Financial Statements and Supplementary Data , of this Annual Report on Form 10-K.

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(1) the non-cash amortization of definite-lived intangible assets, including customer relationships, tradenames and developed technology;

and (2) acquisition-related transaction costs primarily comprised of professional fees.

(4) Represents charges associated with actions taken to better align the company’s organizational structure with its strategic focus and the decision to exit operations in Mexico in fiscal 2021, charges and subsequent adjustments associated with U.S.

retail operating model changes in fiscal 2020, and charges and subsequent adjustments primarily associated with the closure of Best Buy Mobile stand-alone stores in the U.S.

in fiscal 2019.

(5) Represents adjustments resulting from the Tax Cuts and Jobs Act of 2017 (“tax reform”) enacted into law in the fourth quarter of fiscal 2018, including amounts associated with a deemed repatriation tax and the revaluation of deferred tax assets and liabilities, as well as a one-time bonus for certain employees in response to future tax savings created by tax reform.

(6) Represents an increase in the fair value of a minority equity investment in fiscal 2021 and a gain on sale of investments in fiscal 2019.

(7) Represents the summation of the calculated income tax charge related to each non-GAAP non-income tax adjustment.

and (2) acquisition-related transaction and due diligence costs, primarily comprised of professional fees.

(4) Represents charges in fiscal 2021 and subsequent adjustments in fiscal 2022 related to actions taken in the Domestic segment to better align the company’s organizational structure with its strategic focus and the decision to exit operations in Mexico in the International segment, and charges and subsequent adjustments associated with U.S.

retail operating model changes in fiscal 2020.

(5) Represents an increase in the fair value of a minority equity investment in fiscal 2021.

(6) The non-GAAP adjustments primarily relate to the U.S.

As such, the income tax charge is calculated using the statutory tax rate of 24.5% for all U.S.

As such, the income tax charge is generally calculated using the statutory tax rate of 24.5% for U.S.

non-GAAP items for all periods presented.

There is no income tax charge for Mexico non-GAAP items, as there was no tax benefit recognized on these expenses in the calculation of GAAP income tax expense.

Our non-GAAP operating income rate increased in fiscal 2021 primarily driven by increased leverage from higher sales volume on our fixed expenses, which resulted in a favorable SG&A rate, partially offset by a decrease in gross profit rate.

Our non-GAAP effective tax rate increased in fiscal 2021 primarily due to a decrease in the tax benefit from stock-based compensation and the impact of higher pre-tax earnings on discrete tax benefits, partially offset by an increase in the tax benefit from federal tax credits and the resolution of discrete tax matters.

Our non-GAAP diluted EPS increased in fiscal 2021 primarily driven by increases in non-GAAP operating income and lower diluted weighted-average common shares outstanding from share repurchases.

There is no income tax charge for Mexico non-GAAP items and a minimal amount of U.S.

non-GAAP items, as there was no tax benefit recognized on these expenses in the calculation of GAAP income tax expense.

Our non-GAAP operating income rate increased in fiscal 2022, primarily driven by an increase in gross profit rate and increased leverage from higher sales volume on our fixed expenses, which resulted in a favorable SG&A rate.

Our non-GAAP effective tax rate decreased in fiscal 2022, primarily due to multi-jurisdiction, multi-year non-cash benefits from the resolution of certain discrete tax matters.

Our non-GAAP diluted EPS increased in fiscal 2022, primarily driven by the increase in non-GAAP operating income, lower diluted weighted-average common shares outstanding from share repurchases and a lower effective tax rate.

Liquidity and Capital Resources

We closely manage our liquidity and capital resources.

Our liquidity requirements depend on key variables, including the level of investment required to support our business strategies, the performance of our business, capital expenditures, credit facilities, short-term borrowing arrangements and working capital management.

Capital expenditures and share repurchases are a component of our cash flow and capital management strategy which, to a large extent, we can adjust in response to economic and other changes in our business environment.

Our liquidity requirements depend on key variables, including the level of investment required to support our business strategies, the performance of our business, capital expenditures, dividends, credit facilities, short-term borrowing arrangements and working capital management.

We modify our approach to managing these variables as changes in our operating environment arise.

For example, at the onset of the COVID-19 pandemic in fiscal 2021, we adopted several measures to preserve cash, such as reducing capital expenditures, suspending share repurchases and temporarily drawing down on our revolving credit facility.

We have a disciplined approach to capital allocation, which focuses on investing in key priorities that support our strategy.

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January 29, 2022

February 1, 2020

January 30, 2021

Cash and cash equivalents

The increase in cash and cash equivalents in fiscal 2021 was primarily driven by the increase in operating cash flows and a reduction in share repurchases, which were temporarily suspended from March to November of fiscal 2021.

Cash flows from total operations were as follows ($ in millions):

The decrease in cash and cash equivalents in fiscal 2022 was primarily due to share repurchases, investments in capital expenditures, dividends paid and the acquisitions of Current Health and Yardbird.

These decreases were partially offset by positive cash flows from operations, primarily driven by earnings.

Cash flows were as follows ($ in millions):

Total cash provided by (used in):

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Effect of exchange rate changes on cash

Increase in cash, cash equivalents and restricted cash

Increase (decrease) in cash, cash equivalents and restricted cash

Operating Activities

The increase in cash provided by operating activities in fiscal 2021 was primarily due to higher inventory turnover and the timing of inventory purchases and payments to meet continued higher demand.

The increase was also driven by the timing of payments related to accrued compensation and benefits and higher earnings.

In fiscal 2021, cash provided by operating activities was higher than historical averages, primarily due to higher inventory turnover and the timing of inventory purchases and payments to meet continued higher demand.

The decrease in cash provided by operating activities in fiscal 2022 was primarily due to the timing and volume of inventory purchases and payments, reflecting an earlier build of inventory and greater inventory availability in the fourth quarter of fiscal 2022, which resulted in a higher proportion of inventory purchases having been paid for, compared to fiscal 2021.

This decrease was partially offset by higher earnings in fiscal 2022.

Investing Activities

The decrease in cash used in investing activities in fiscal 2021 was primarily due to the absence of acquisitions.

The increase in cash used in investing activities in fiscal 2022 was primarily due to the acquisitions of Current Health and Yardbird .

Financing Activities

The decrease in cash used in financing activities in fiscal 2021 was primarily due to lower share repurchases, which were temporarily suspended from March to November of fiscal 2021.

The increase in cash used in financing activities in fiscal 2022 was primarily due to higher share repurchases.

Sources of Liquidity

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There can be no assurance that we will continue to generate cash flows at or above current levels or that we will be able to maintain our ability to borrow under our existing credit facilities or obtain additional financing, if necessary, on favorable terms.

We have a $1.25 billion five-year senior unsecured revolving credit facility (the "Facility”) with a syndicate of banks.

In light of the uncertainty surrounding the impact of COVID-19 and to maximize liquidity, we executed a short-term draw on the full amount of the Facility on March 19, 2020, which remained outstanding until July 27, 2020, when the amounts we had borrowed under the Facility were repaid in full.

There were no borrowings outstanding under the Facility as of January 30, 2021, or February 1, 2020.

Our ability to continue to access the Facility is subject to our compliance with its terms and conditions, including financial covenants.

On May 18, 2021, we entered into a $1.25 billion five year senior unsecured revolving credit facility agreement (the “Five-Year Facility Agreement”) with a syndicate of banks.

The Five-Year Facility Agreement replaced the previous $1.25 billion senior unsecured revolving credit facility (the “Previous Facility”) with a syndicate of banks, which was originally scheduled to expire in April 2023, but was terminated on May 18, 2021.

The Five-Year Facility Agreement permits borrowings of up to $1.25 billion and expires in May 2026.

There were no borrowings outstanding under the Five-Year Facility Agreement as of January 29, 2022, or under the Previous Facility as of January 30, 2021.

Our ability to continue to access the Five-Year Facility Agreement is subject to our compliance with its terms and conditions, including financial covenants.

The financial covenants require us to maintain certain financial ratios.

As of January 29, 2022, we were in compliance with all financial covenants.

If an event of default were to occur with respect to any of our other debt, it would likely constitute an event of default under the Facility as well.

If an event of default were to occur with respect to any of our other debt, it would likely constitute an event of default under the Five-Year Facility Agreement as well.

Our credit ratings and outlook as of March 16, 2022, are summarized below.

On February 26, 2021, Moody’s upgraded its rating to A3 and confirmed its outlook of Stable.

Standard & Poor’s rating and outlook remained unchanged from the prior year.

On May 20, 2021, Standard & Poor’s upgraded its rating to BBB+ and confirmed its outlook of Stable.

Moody’s rating and outlook remained unchanged from those disclosed in our Annual Report on Form 10-K for the fiscal year ended January 30, 2021.

Rating Agency

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Restricted Cash

Our liquidity is also affected by restricted cash balances that are primarily restricted to use for workers'

compensation and general liability insurance claims.

Restricted cash, which is included in Other current assets on our Consolidated Balance Sheets, was $131 million and $126 million as of January 30, 2021, and February 1, 2020, respectively.

Our liquidity is also affected by restricted cash balances that are primarily restricted to use to cover self-insurance liabilities and product protection plans provided under our Totaltech membership offering.

Restricted cash, which is included in Other current assets on our Consolidated Balance Sheets, was $269 million and $131 million as of January 29, 2022, and January 30, 2021, respectively.

The increase in restricted cash was primarily due to the initial funding related to the national launch of our Totaltech membership offering in October 2021.

Capital Expenditures

Our capital expenditures typically include investments in our information technology (including e-commerce), stores and distribution capabilities.

Capital expenditures were as follows ($ in millions):

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(2) Total capital expenditures exclude non-cash capital expenditures of $46 million, $32 million and $10 million in fiscal 2022, fiscal 2021 and fiscal 2020, respectively.

Non-cash capital expenditures are comprised of finance leases, as well as additions to property and equipment included in accounts payable.

Non-cash capital expenditures are comprised of additions to property and equipment included in accounts payable, as well as finance leases.

We currently expect to increase our annual capital expenditures to at least $1 billion over the next three fiscal years as we continue to invest in our stores and information technology to further our strategy.

Debt and Capital

As of January 29, 2022, we had $500 million of principal amount of notes due October 1, 2028 (“2028 Notes”) and $650 million of principal amount of notes due October 1, 2030 (“2030 Notes”).

Upon issuance of our 2030 Notes, we cash settled the associated Treasury Rate Lock ("T-Lock") contracts entered into in fiscal 2021 to hedge the base interest rate variability on a portion of our then-expected refinancing of our maturing $650 million of principal amount of notes due March 15, 2021 (“2021 Notes”).

The net proceeds from the 2030 Notes were used to replace our 2021 Notes that we retired in December 2020 by exercising our option to redeem the notes at par.

Refer to Note 6, Derivative Instruments , and Note 8, Debt , in the Notes to Consolidated Financial Statements, included in Item 8, Financial Statements and Supplementary Data , of this Annual Report on Form 10-K for further information about our T-Lock contracts and outstanding debt.

Refer to Note 8, Debt , in the Notes to Consolidated Financial Statements, included in Item 8, Financial Statements and Supplementary Data , of this Annual Report on Form 10-K for further information about our outstanding debt.

Share Repurchases and Dividends

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Our long-term capital allocation strategy is to first fund operations and investments in growth and then return excess cash over time to shareholders through dividends and share repurchases while maintaining investment-grade credit metrics.

On February 23, 2019, the Board authorized a $3.0 billion share repurchase program.

On February 16, 2021, the Board approved a new $5.0 billion share repurchase program, replacing the existing program which had $1.7 billion remaining available for repurchases as of January 30, 2021.

On February 16, 2021, our Board approved a $5.0 billion share repurchase program.

On February 28, 2022, our Board approved a new $5.0 billion share repurchase program, replacing the then-existing program, which had $1.6 billion remaining available for repurchases as of January 29, 2022.

There is no expiration date governing the period over which we can repurchase shares under this authorization.

We temporarily suspended all share repurchases from March to November of fiscal 2021 to conserve liquidity in light of COVID-19-related uncertainties.

Between the end of fiscal 2021 on January 30, 2021, and March 18, 2021, we repurchased an incremental 8.1 million shares of our common stock at a cost of $873 million.

On February 25, 2021, we announced our plans to spend at least $2 billion on share repurchases in fiscal 2022.

On March 3, 2022, we announced our plans to spend approximately $1.5 billion on share repurchases in fiscal 2023.

Share repurchase and dividend activity were as follows ($ and shares in millions, except per share amounts):

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Cash dividends declared and paid

Dividends declared and paid increased in fiscal 2021 primarily due to an increase in the regular quarterly cash dividend per share.

On February 25, 2021 , we announced the Board’s approval of a 27% increase in the regular quarterly dividend to $0.70 per share.

The total cost of shares repurchased increased in fiscal 2022, primarily due to our announced plan to repurchase more than $2.5 billion shares in fiscal 2022, following the temporary suspension of all share repurchases from March to November of fiscal 2021 to preserve liquidity in light of COVID-19-related uncertainties.

Between the end of fiscal 2022 on January 29, 2022, and March 16, 2022, we repurchased an incremental 2.4 million shares of our common stock at a cost of $239 million.

Cash dividends declared and paid increased in fiscal 2022, primarily due to an increase in the regular quarterly cash dividend per share.

On March 3, 2022 , we announced the Board’s approval of a 26% increase in the regular quarterly dividend to $0.88 per share.

Other Financial Measures

Our current ratio, calculated as current assets divided by current liabilities, remained relatively unchanged at 1.2 as of January 30, 2021, compared to 1.1 as of February 1, 2020.

Our debt to earnings ratio, calculated as total debt (including current portion) divided by net earnings, remained unchanged at 0.8 as of January 30, 2021, and February 1, 2020.

Our current ratio, calculated as current assets divided by current liabilities, decreased to 1.0 as of January 29, 2022, compared to 1.2 as of January 30, 2021, primarily due to the decrease in cash and cash equivalents.

Our debt to earnings ratio, calculated as total debt (including current portion) divided by net earnings, decreased to 0.5 as of January 29, 2022, compared to 0.8 as of January 30, 2021, primarily due to higher earnings.

Off-Balance-Sheet Arrangements and Contractual Obligations

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Interest payments (5)

Short-term debt obligations (4)

Finance lease obligations (2)

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(5) Interest payments related to our 2028 Notes and 2030 Notes include the variable interest rate payments included in our interest rate swaps.

Additionally, we have $1.25 billion in undrawn capacity on our Facility as of January 30, 2021, which if drawn upon, would be included as short-term debt on our Consolidated Balance Sheets.

Additionally, we have $1.25 billion in undrawn capacity on our Five-Year Facility Agreement as of January 29, 2022, which if drawn upon, would be included in either short-term or long-term debt on our Consolidated Balance Sheets.

Critical Accounting Estimates

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Our significant accounting policies are discussed in Note 1, Summary of Significant Accounting Policies , of the Notes to Consolidated Financial Statements, included in Item 8, Financial Statements and Supplementary Data , of this Annual Report on Form 10-K.

Other than our adoption of Accounting Standards Update (“ASU”) 2016-02, Leases , in the first quarter of fiscal 2020, and our adoption of ASU 2014-09, Revenue from Contracts with Customers , in the first quarter of fiscal 2019, we have not made any material changes to our accounting policies or methodologies during the past three fiscal years.

Other than our adoption of Accounting Standards Update (“ASU”) 2016-02, Leases , in the first quarter of fiscal 2020, we have not made any material changes to our accounting policies or methodologies during the past three fiscal years.

We believe that the following accounting estimates are the most critical to aid in fully understanding and evaluating our reported financial results.

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Vendor Allowances

We receive funds from our merchandise vendors through a variety of programs and arrangements for product advertising and product placement, primarily in the form of allowances based on purchases or sales volumes.

We receive funds from our merchandise vendors through a variety of programs and arrangements, primarily in the form of purchases-based or sales-based volumes and for product advertising and placement .

We recognize allowances based on purchases and sales as a reduction of cost of sales when the associated inventory is sold.

Allowances for advertising and placement are recognized as a reduction of cost of sales ratably over the corresponding performance period.

Funds that are determined to be a reimbursement of specific, incremental and identifiable costs incurred to sell a vendor's products are recorded as an offset to the related expense when incurred.

Funds that are determined to be a reimbursement of specific, incremental and identifiable costs incurred to sell a vendor's products are recorded as an offset to the related expense within SG&A when incurred.

Judgments and uncertainties involved in the estimate

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A 10% change in our vendor funding deferral as of January 29, 2022, would have affected net earnings by approximately $35 million in fiscal 2022.

The overall level of deferral has remained relatively stable over the last three years.

Goodwill is not amortized but is evaluated for impairment annually in the fiscal fourth quarter or whenever events or circumstances indicate the carrying value may not be recoverable.

The overall level of vendor funding deferral has remained relatively stable over the last three fiscal years.

Goodwill is evaluated for impairment annually in the fiscal fourth quarter or whenever events or circumstances indicate the carrying value may not be recoverable.

The impairment test involves a comparison of the fair value of each reporting unit with its carrying value.

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Judgments and uncertainties involved in the estimate

Determining fair value of a reporting unit is complex and typically requires analysis of discounted cash flows and other market information, such as trading multiples and other observable metrics.

Determining fair value of a reporting unit is complex and typically requires analysis of discounted cash flows and market information, such as trading multiples and other observable metrics.

Cash flow analysis requires judgment regarding many factors, such as revenue growth rates, expenses and capital expenditures.

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There is greater uncertainty surrounding the key assumptions used to estimate the fair value of the Best Buy Health reporting unit and therefore a greater degree of complexity and judgment involved in our impairment analysis.

Our valuation of Best Buy Health incorporates relatively higher levels of revenue growth than our valuation of Best Buy Domestic and, consequently, estimation of factors such as new customer growth, customer retention rates, capital expenditure requirements, advertising and cost to serve expenses and weighted-average cost of capital rates that incorporate significant judgment.

Our valuation of Best Buy Health incorporates relatively higher levels of revenue growth than our valuation of Best Buy Domestic, and incorporates estimates such as new customer growth, customer retention rates, capital expenditure requirements, advertising and cost-to-serve expenses and weighted-average cost of capital rates, all of which incorporate significant judgment.

Effect if actual results differ from assumptions

A 10% change in the fair value of the Best Buy Health reporting unit as of January 30, 2021, would not have had a material effect on our net earnings in fiscal 2021.

Since acquisition, our estimate of the fair value of Best Buy Health has remained relatively stable.

A 10% change in the fair value of the Best Buy Health reporting unit as of January 29, 2022, would not have triggered an impairment of goodwill in fiscal 2022.

The fair value of our Best Buy Health reporting unit has remained substantially in excess of its carrying value over the last three fiscal years.

Inventory Markdown

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Tax Contingencies

Our income tax returns are periodically audited by U.S.

federal, state and local and foreign taxing authorities.

Our income tax returns are routinely examined by domestic and foreign tax authorities.

Taxing authorities audit our tax filing positions, including the timing and amount of income and deductions and the allocation of income among various tax jurisdictions.

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A favorable tax settlement may reduce our effective income tax rate in the period of resolution.

See Note 11, Income Taxes , of the Notes to Consolidated Financial Statements, included in Item 8, Financial Statements and Supplementary Data , of this Annual Report on Form 10-K for additional information.

Service Revenue

We sell support plans as part of a bundled service offer which may include items such as technical support, price discounts on future purchases, anti-virus software and one-time service repairs.

We sell membership plans that include access to benefits such as technical support, price discounts on certain products and services, product protection plans and anti-virus software.

We allocate the transaction price to all performance obligations identified in the contract based on their relative fair value.

For technical support services, we typically recognize revenue over time on a usage basis, an input method of measuring progress over the related contract term.

For performance obligations provided over the term of the contract, we typically recognize revenue on a usage basis, an input method of measuring progress over the related contract term.

This method involves the estimation of expected usage patterns, primarily derived from historical information.

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A 10% change in the amount of services membership deferred revenue as of January 29, 2022, would have affected net earnings by approximately $26 million in fiscal 2022.

The amount of services membership deferred revenue has remained relatively stable over the last three fiscal years.

While our underlying assumptions have remained relatively consistent, the amount of services membership deferred revenue has increased over the last three fiscal years, primarily due to growth in our membership program offerings.

New Accounting Pronouncements

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity