Best Buy's CEO Presents at 2014 Regular Meeting of Shareholders Conference (Transcript)

Jun.10.14 | About: Best Buy (BBY)

Best Buy Co Inc (NYSE:BBY)

2014 Regular Meeting of Shareholders Conference Call

June 10, 2014 10:30 AM ET


Hatim Tyabji – Chairman

Hubert Joly – President, Chief Executive Officer & Director

Mollie O'Brien – Senior Director-Investor Relations

Hatim Tyabji

It’s 9:30 time to get started, I’m Hatim Tyabji and at this time I would like to call the 2014 Regular Meeting of Shareholders to order. I want to welcome all our shareholders attending today including everyone here on the Corporate Campus and those watching live on Best Buy’s website. Thank you for your interest in our company and for taking the time to be with us today.

At this time I would like to introduce the other Directors and Executive Officers of the company who I have. With me in front of the room are Hubert Joly, our President and Chief Executive Officer and a Director of the company; Sharon McCollam, our Chief Administrative Officer and Chief Financial Officer; and Keith Nelsen, our Secretary and General Counsel.

Also in attendance at the Corporate Campus all our directors Lisa Caputo, Russ Fradin, Kathy Higgins Victor, Sanjay Khosla, Al Lenzmeier, and Gerard Vittecoq. Brad Anderson was unable to join us this morning. We’re excited and pleased to introduce two new directors to our shareholders. First let me introduce David Kenny, who joined our Board in September of last year. David is the Chairman and Chief Executive Officer of The Weather Company and brings deep expertise in e-commerce and consumer analytics to our board. Secondly, both David and Tommy have qualifications and background that very nicely complement our Renew Blue transformation efforts. And we’re pleased to welcome them both to their first Best Buy Shareholder Meeting.

I would now like to introduce our another Executives Officers in attendance, Shari Ballard, President, U.S. Retail and Chief Human Resources Officer; Mike Mohan, our Chief Merchandising Officer; Chris Askew, President of Services; Matt Furman, Chief Communications and Public Affairs Officer and Mary Lou Kelley, President of e-Commerce.

I would also like to introduce representatives from our independent accounting firm, Deloitte & Touche. Scott Erickson, Lead Client Service Partner; Bob Kueppers, Advisory Partner and Nathan Evans, Audit Senior Manager. And certainly last but not at all least, I view it as a personal pleasure and a privilege to introduce Elliot Kaplan. Elliot is one of our former and very long serving directors and who over the years as also became a good friend, welcome Elliot.

As a reminder to our audience there are reporters present we ask that reporters refrain from asking questions during the Shareholders Meeting. This meeting is for the benefit of our shareholders there is time set aside for shareholder questions during the question-and-answer session later in the meeting. The board has adopted an agenda that will govern the order of business at this meeting and has adopted certain rules of conduct for the meeting. If you have not yet received the copies of the agenda or rules of conduct please raise your hand now and copies will be brought to you. The rules of conduct also govern the question-and-answer session that will follow adjournment of the meeting.

We will try to get as many of your questions as possible during our Q&A session. Including those questions that we’re submitted online before the meeting. Let me now introduce our Inspector of Elections, the Board of Directors has appointed Jane Drymen of Broadridge to act as Inspector of Elections for this meeting. She has previously taken her oath as Inspector of Elections and is located at the table at the back of the room. The polls are opened for voting most shareholders have already voted by proxy and we’ve tallied your proxy votes. For those of you who have not yet voted or who want to change your vote, ballots are available from the Inspector.

Please vote now. If you have already voted, filling out a ballot and giving it to the Inspector will revoke any earlier votes. The polls will close as soon as we announce the items to be voted upon. Until the polls close, any shareholder may revoke or change his or her proxy on any matter and may vote on any matter.

The notice of meeting and our proxy materials were distributed by Broadridge beginning April 29, 2014 to all shareholders of record as of April 14, 2014, and as a result the meeting is being held pursuant to proper notice. Proxies representing more than 91% of the approximately 350 million shares of the company's outstanding stock eligible to vote have been received, and accordingly, a quorum is present and the meeting is duly constituted and should proceed.

Upon motion the reading of the minutes of the regular meeting of shareholders held on June 20, 2013 will be waived.

Unidentified Company Representative

So moved.

Unidentified Company Representative

Aye second.

Hatim Tyabji

Now shareholders will consider the items set forth in the proxy statement. The audience will have the opportunity to ask any questions related to these proposals after all of the proposals have been presented. Please hold off on any questions or comments about the proposals until that time.

The first item of business is the election of seven directors to serve for a term of one year and The Board of Directors has nominated Lisa Caputo, Russ Fradin, Kathy Higgins Victor, Hubert Joly, David Kenny, Tommy Millner and Gerard Vittecoq. The board recommends a vote in favor of each of the nominees. The nominees receiving the majority of votes cast by the shares actually voted will be elected.

As explained in our proxy statement the directors who are not standing for election this year are currently serving out their final two year terms as Class 2 directors. Once these two year terms conclude at our 2015 Regular Meeting of Shareholders our board will be fully declassified and all directors will stand for election on an annual basis.

The second item of business is the ratification of the appointment of Deloitte & Touche LLP as the company's independent auditor for the current fiscal year ending on January, 31, 2015. The board recommends approval of the proposal. The proposal requires the affirmative vote of the majority of shares voting on this matter.

The third item of business is an advisory vote on our executive compensation as detailed in our proxy statement. The board and management sort out shareholder feedback in regards to our compensation practices over the course of the last year. We fully considered all feedback as we made decisions regarding our executive compensation. As a result, the board made compensations decisions this past year, which demonstrate our continued commitment to aligning executive pay with business results. Accordingly, the board recommends approval of the proposal.

The fourth item of business is a vote on management's proposal to approve the Best Buy Company 2014 Omnibus incentive plan. As stated in our proxy statement, our current Omnibus and stock incentive plan is schedule to expire later this month. The proposed plan would replace the expiring plan and provide a means for us to continue to incent and reward our employees with equity based compensation, which is essential to our pay-for-performance philosophy and in linking compensation to increased value for our share holders. The board recommends approval of this proposal.

I would now like to open the floor to any discussion regarding these proposals. If your question is not about one of these proposals, please hold off on asking it until later in the meeting during our Q&A session. Since there are no comments or additional discussion on these proposals, I now declare the polls closed.

Preliminary results show that the majority of shareholders who voted supported the boards’ recommendation on all four of the proxy proposals. We expect to post details of final voting results on these matters within four business days on a Form 8-K.

We have now completed the business portion of our meeting. Is there a motion to adjourn the business portion of the 2014 Regular Meeting of Shareholders?

Unidentified Company Representative

So moved.

Unidentified Company Representative

Aye, second.

Hatim Tyabji

I therefore declare, the business portion of our Regular Meeting of Shareholders adjourned. Let us now move on to the management presentation. Please remember that comments made by me or by others, may contain forward-looking statements which are subject to risks and uncertainties. To find out more about the factors that could cause actual results to differ from management's expectations. Please see our SEC filings on our website or on the SEC's website.

I would further request you to hold off asking your questions during the management presentation. As we’ve planned to address your questions during the Q&A session. At this time I would like to warmly welcome Hubert Joly, Best Buy’s President and Chief Executive Officer.

Hubert Joly

Thank you, Hatim. And my thanks also of course to the Best Buy Board of Directors and to the executive team and to the Best Buy leaders in attendance here. And of course many thanks to you our shareholders we’re very grateful for your presence and your support. So, last fiscal year was really the first full year of our Renew Blue transformation. And I’m happy to report that our transformation is off to an encouraging start as we’ve made significant progress on our key priorities.

My second message this morning as we continue to be excited by our opportunities and the roadmap we’ve outlined and pursued of our long-term objectives so let me spend a moment reviewing the progress we’ve made last year around our key priorities. Our first goal was to enhance the customer experience and indeed we enhance how we serve our customers and we’ve build key foundational capabilities for the future.

So for example we increased our net promoter score by more than 300 basis points, we mean that customers are more satisfied with their experience. We also increased significantly our price competitiveness and implemented a low price guarantee allowing us to turn the issue of showrooming on its head. We implemented traffic generating and customer experience initiatives that drove a 20% domestic online sales increase, proving our commitment to serve the customers how, when and where they want and in Q1 of fiscal 2015 we show an acceleration of this growth with our online comps raising to 29%.

One thing is we did is that we earn lot approximately $2 billion of retail inventory through the roll out of what we call ship-from-store. The ship-from-store capability to more than 1,400 of our locations during the U.S. allowing us to better serve our online customers.

The second priority of course importance that we’ve made progress in strengthening our management team and improving employee engagement which of course is critical to our success. As raised to our partners the third priority we partnered with two of our vendors to develop and launch 1,400 Samsung and 1,600 Windows stores within a store in a win, win, win arrangement that is benefiting our customers, our vendors and our shareholders. And in terms of financial results, we made progress in stabilizing our top line despite and industry decline, we delivered cost reductions above our original cost reduction target. And finally we strengthened our balance sheet, let me comment on each of these.

Our domestic comparable sales were down slightly. However, when adjusted for the rationalization of non-core businesses in the short-term disruption related to floor space optimization. Domestic comparable sales were flat, which resulted in our gaining market share. And in little more than a year, we exceeded our multi year Renew Blue cost reduction target of $725 million by delivering total reductions of $860 million including $95 million in savings this past quarter.

So why we’ve not yet stabilized our operating margin, cost savings and operational improvements have offset the investments we’ve made in pricing and other Renew Blue investments. And we significantly strengthened our balance sheet, who were focused in our core business and it’s substantially more disciplined capital allocation process including having showed our interest in Europe and mindSHIFT Technologies. So these are some of the highlights of what we’ve accomplished.

During this context, the Board of Directors announced today, an increase in the company’s quarterly cash dividends from $0.17 to $0.19 per common share an increase of 12%. The change will be effective with the quarterly dividend payable on October 2, of this year. And our decision to increase the amount of cash were returning to shareholders is indicative of our improved cash position and our confidence in the cash generation – cash generating power of our multichannel business model.

Now, let’s look ahead – looking ahead. Return to the next chapter of our transformation one we call Renew Blue Ignite the Possible. A misision as a company is to enrich and empower people’s life’s through technology. Simply put we seek to ignite human potential. We seek to awaken the giant inside everyone enlighting students of all ages inspire parents connect families and empower dreamers through technology. And so our role is to be our customers trusted partner for technology.

In fact, in essence we aspire to be a more than a retailer we want to go from simply selling product anyone can do it, to igniting the possibilities for our customers only we can do this. And we do this by offering advice, service and convenience at competitive prices. This is the essence of our value proposition.

Now while we’ve made progress this past year we feel there is much more to do with it fully bring this value proposition to light for our customer. And so as we’ve discussed before transformation is a multiyear journey. And building on the momentum we’ve established in our first year of our transformation we will continue to address three business imperatives in this new phase.

One is to continue to improve our operational performance, two is to build foundational capabilities necessary to unlock future growth strategies and face to leverage our unique assets to create significant differentiation that is meaningful for our customers and for our vendors.

And underpinning this belief and depending there is a core belief. One we have significant unique assets we can build upon to provide a superior customer experience including our customer database, our store footprint, our multichannel capabilities our relationship with key vendors and our service capabilities. And the second element of this core belief is that why the consumer electronics market will go up and down largely based on product cycle. We believe there are multiple long-term growth opportunities we can pursue including deepening our relationship with our customers and better serving them around key buying occasions and successfully implementing our strategy as implication across all facets of our business.

And we’ve outlined it’s a roadmap initiatives that will be pursing over the next two years. So let me give you a few examples, in the merchandizing area our merchant teams are focused on creating compelling assortments online and in our stores with a superior end to end customer experience that can yield enhance financial result.

This includes the expansion of our Pacific home and kitchen and Magnolia Design Center, stores-within-a-store both of which are outperforming our initial expectations. Our merchant teams also working on strengthening vendor partnerships for the benefit of our customers. Our vendors and our shareholders.

For example we recently announced a home theatre shop-in-shop experience with both Sony and Samsung that will allow our customers to discover an experience. The amazing new technology that are now available in the TV market. In the marketing area our marketing teams are focused on evolving our approach from analog and mass to digital and revellent. There are also developing our strategy to better serve customers around the key life events. In choice gifting occasions, moving, marriage had often motive the American consumer to make a purchase. In the online area has reached to online our goal is to capture online share and serve customers based on how where and want excuse me where and when they want to be served.

Our aspiration is to create end to end customer experiences that allow our customers to smoothly and fully experience the possibilities of technology. In retail we’ve evolved our store organization to better support the nation of retail which is the floorless execution of our category and functional strategies the development and implementation of effective market level strategies that take into account local specificities and lifting our performance in terms of employee engagement, sales, customer satisfaction and profitability.

The key element of our roadmap which is Geek Squad the complement of the products we offer will be reinvigorated Geek Squad we’re celebrating the 20th birthday of Geek Squad this year, still a very young age many possibilities and one that Geek Squad that lives up to its proud history as the first, largest and the best consumer electronic services organization.

Now what here includes refining our existing service offerings improving the merchandizing of our services and building new offerings, that meet the needs of customers in the context of today’s rapidly evolving technology environment.

And now the key opportunity for us is to further leverage our supply chain to provide our customers with better inventory availability and improved home delivery capabilities. The key enabler of this effort is our recently launched ship-from-store capability as of January of this year, we are now able to ship out of all of our 1,400 retail stores in the U.S. and this capability not only significantly contributes to our online growth by meaningfully reducing our out-of-stock messages, it also allows us to increase our speed of delivery to our customers.

So, going forward we are working to make available to customers returned open-box inventory that has previously been trapped in our stores. This is important, because individual stores don’t generally you have the traffic necessary to optimize major recovery on these products. The majority of open box consumer electronics is actually sold online and now ours will be as well.

Now beyond this, we will continue to pursue cost reduction opportunities and support of our recently increased cost reduction target of $1 billion. And these opportunities include improving how we manage returns replacements and damages, logistics and supply chain, as well as procurements.

Now, as optimistic as we are about the effectiveness of these initiatives there remains one structural impediments to our business that’s why we’re working hard to fix. Simply put online only retailers today, I’m not compiled to collect sales tax.

And there is a consequence, there is a material advantage over retailers who have physical stores. This affects now just the big box retailers like Best Buy, but the hundreds of thousands of small businesses all around the country who depending on their states sales tax rate maybe competing with these online on the retailers with as much as with 10% price disadvantage.

And these businesses including are working to change Federal law. So that’s states are permitted to collect tax on online on the purchases if they choose too. Over the past several months, when I was not busy in stores, I have spent a great deal of time meeting with members of Congress from both parties to advance this matter. And the good news is that there is a wide spread understanding of the problem and I believe that it is time to do something about it.

Specifically, Congressmen and Senators understand that the federal sales tax was wherewithal long before the Internet, Congress took off or even existed and have not since then been updated. They understand that the government should have been in the business of picking winners and losers, as it is doing under the current tax policy.

They understand that it is a statewide issue, because state should be permitted to choose how to treat Internet on the retailers selling products in their state. And finally, they understand this is a matter of job. Jobs that we’ll continue to be lost across the U.S. as businesses of all phases are unable to compete with online on the players, who have a meaningful government sanction advantage. This Internet on the retailers are not the real source of jobs in cities and towns across America.

It is the brick and mortar multi-channel companies that employ your friends, family, and neighbors. It is these companies that are paying their taxes and helping find the scores, infrastructure and emergency services that are so vital to our communities. So last year in May, the U.S. Senate overwhelming in favor of what is called the Marketplace Fairness Act. And now their house have represented them as the opportunity, I would say, the responsibility through act and it is where all of you can help.

We are asking all interested citizens to e-mail text or call their Congressman and urge them to support this bill. Now it’s the time to act, because this Congressional session is rapidly coming through a close and no longer we wait the more jobs will be lost throughout the country.

You can see on the screen how to do this and we thank you in advance for your help in fixing this problem and leveling the Plainfield for I saw. Now beyond our boarders outside of the U.S., we continue to be focused on improving the performance in our International business. As in the U.S., we are seeking to address top line growth. We are improving online capabilities. We are strengthening the retail foundation and materially reducing costs.

Finally, let me say a few words about a key foundational area of focus for us, which is employee engagement. Across the company all of us share a passion and commitment to serving our customers in such an extraordinary matter that they all become promotors of Best Buy. And this commitment in this passion has been a key driver of the improved net from scores we saw last fiscal year and is the one of the pillars, the five pillars of the renewable transformation.

I’m incredibly grateful to our employees for the passion and commitments to demonstrate everyday that has lead to these improvements. In closing, let me say this, we aspire to ignite human potential, we seek to be a trusted partner to the consumer and also what you believe is a unique value proposition advice, service and convenience all our competitive prices, advice, service and convenience are competitive prices.

We are on a very exiting journey. One in which we seek to make promotors out of our – all of our customers, but we seek to attract, develop and reward outstanding leaders and associates, where we seek to partner effectively with key vendors and where we seek to provide effective returns to our investments. As we continue to move forward, I want to once again thank our team for dedication and hard work. Also want to thank our business partners for their collaboration and new our shareholders for the support and confidence that you’re placing in us

So, thank you very much. And I will declare to take your questions and I’ll take you back. Thank you.

Question-and-Answer Session

Mollie O’Brien

Good morning. It’s now time for the question-and-answer session. I’m Mollie O’Brien Best Buy’s Senior Director of Investor Relations. Members of our team are in the idols with microphones. And we’ll take as many shareholder questions as we can. We’ll do this for about 15 minutes and we hope to answer questions that were submitted both online and questions here in the theatre. If a shareholder wants to ask a question or speak during this time, please raise your hand and wait for microphone to be brought to you. Once you recognize you, please identify yourself and then make a remark for ask your question. Please limit your remarks to corporate business and make them no longer than one minute so that we can take as many questions as possible in the time we’ve allowed.

We will open the session with the question that was submitted online. This one is for Hubert. You’ve already announced Samsung shops, the window stores and home theater partnerships for Samsung and Sony, what is the long-term strategy will you continue to do this with industrial investors? All right additional vendors?

Hubert Joly

So, the first thing I would say is that the results of the first vendor partnerships has been very positive. The customer reaction has been very positive it allows the customers to experience that’s if you understand how these technologies work have been very positive for the vendors, and has been very positive for us the – as the economies are much improved. The fact they have been positive is in fact would has driven some of these vendors to want to do more.

So the fact that’s Samsung and Sony are doing these vendor experiences in the home theater section and of course the reflection of that in confirms, the strengths of the assets of Best Buy including the customer base, the store footprints and his relationships. The criteria we use to decide whether or not to do a vendor experience free for it needs to be good for the customers first and foremost, needs to be good for the vendor, seems to be good for us. And is on that basis that we decide to do this traditional once to share, I think it’s highly probable they would be more now we never imagine that the entire store will be just a collection of vendor experiences because not all part of the stores then themselves to that. The other thing is that these are very significant investments on the part of our vendor partners. So there is a hurdle to this. Again I think it has been a very positive move and a clear indication that the support of the tech community for Best Buy I think is very inspiring from that standpoint and we see that it makes a difference for again the customers and our shareholders.

Mollie O’Brien

Great, let’s take a question from the room now.

Unidentified Analyst

My son works in Geek Squad and has since he was 16 and now he is going to graduate school. So he won’t be any more. But the employees were very unhappy with opening on Thanksgiving and if my understand was not very successful anyway they had a initial push and all night long, [indiscernible] anyone there until morning. I’m wondering if you’re going to continue with that policy.

Hubert Joly

First of all I want to thank your son for the time he is given to Best Buy and I’m sure he is doing a great job for the company. The question of the opening hours on Thanksgiving has been the matter of a lot of discussions and that is raised on the part of the company. Back in November of 2012, so the first Thanksgiving I was there, I was struck by the fact that we open at midnight and our competitors target Walmart were opened the previous evening. Clearly trying to win the battle without playing is difficult, I think it’s impossible. And we felt that we need to be relevant for the customers and our shareholders.

Last year we opened at 6 PM and we were able to participate fully in this part of the holiday season the results were actually quite positive if not we don’t breakdown our results week-by-week but it was a positive decision the one of aspects by the way from a customer standpoint. Now none of our customers are forced to shop on Thanksgiving right it’s a free country which was very positive is that before people where waiting in line at 11 PM or midnight in the court middle of night not a great customer experience a big rush so very long lines. And then a rush not a terrible service because you have the huge peak and then this huge low, the lines were much shorter at 6 PM because some people were finishing their dinner, but the customer experience was much better because it was much more smooth out during the evening.

Now looking at next year we’ll not finalize our plans we’ll access what we want to do looking at the interest of the now our shareholders, our customers and our employees. We care about the three dimensions running a business is optimizing the three dimensions at the same time all of the executives by the way were in stores during that entire weekend and night and so forth it is not just the employees working, that one of things that extraordinarily inspiring at Best Buy is how the entire company mobilizes in particular around these key buying occasions and buying times around serving the company I think that our shareholders and executives at the company I’m incredibly proud of the commitment. Sometimes it leads to sacrifices. There has been a lot of sacrifices on the part of your management team and the employees in the last several quarters as we work hard to stabilize and rejuvenate the company. So I would not deny that there is no efforts that’s involved in this. And for that I’m incredibly graceful, because I know that sometimes it comes at a personal cost. What I think is we are trying to do now finish of this, last thing is giving, as we try to emphasize volunteers, the first I think in most of the stores the question was who would like to work and of course there was extra pay end so forth. Now I cannot guarantee that cases volunteers weren’t enough and again there is sometimes there is sacrificing it’s the balancing act.

Mollie O'Brien

Great. Another question in the room? I think there is.

Unidentified Analyst

I see that you added two additional board members and not to discredit the talent and experience that they bring, but I’m wondering when we’re going to be able to see some more diversity.

Unidentified Company Representative

So at the company, we actually of attach a lot of value to diversity at all levels within the company, I’m going to use the opportunity to say few words around this and then I’ll would come specifically to the board. We think diversity is a key element of our success and key requirements for our success at the store level. Our stores serve different types of communities in the Florida Mall Store in Florida 75% of the customers are Brazilians, so speaking Portuguese is essential; Chicago, in some parts of Chicago speaking Polish is important. I’m sure there are some part of the country where speaking French must be important, but that cannot be the majority. So we are not over emphasizing this.

I think of course the Hispanic market is much more important, Southern California, Texas. We also emphasize diversity of talent, our business is really a multifunctional operation, so we need amazing retail tenant, we need amazing online tenant, amazing supply chain talent, the supply chain talent we have at the company, I’m looking at Tim Anderson, is extraordinary. We need great merchants, with great amazing IT talent, so clearly multi-functional. We need diversity in terms of people who have been with the company for a long time as well as new talent, new players, we need general diversity.

I’m personally passionate about general diversity, there is ample evidence that companies that have a good mix from a general standpoint perform better for this share holders. I’m very excited that out of eight members of our executive teams, we have three women in county. This is I think especially is significantly above average compared to other U.S. Corporations. In our board – looking at the board, I’m very excited that we have some general diversity; I think we could probably do better and we have also geographic and ethnic diversity.

This is one of the criteria we use, now could we do better looking at you know we partner with Kathy as the head of the Nominating and Governance Committee, it’s one of the things we look at. So, I want to convey how passionate certainly I am personally, but I am not the only one about diversity in all facets of the company. Saying that we are at the end of our journey from that standpoint would be inappropriate, so we’ll continue to work on that journey, I know I’m looking at Shari [indiscernible] effectively with Shari on initiatives around business a deeply, deeply held conviction that diversity is one of things that will happens win at all levels in the company.

Unidentified Company Representative

Not for another question submitted online. With following revenues in the international market, why doesn’t the company expand the Best Buy Mobiles stand alone store to more malls and outlets in Mexico and Canada?

Hubert Joly

So I’ll take that a question. So Best Buy mobile store is a part of our strategy. We have opened seven additional Best Buy mobile stores in Canada, and one additional small firm at Best Buy Express store in Mexico. And so altogether we have 56 Best Buy mobile stores in Canada.

Now, this being said, the consumer electronics industry in various countries, Canada in particular has been soft, has been down in the last several quarters. And so, adding square footage doesn’t seem like an obvious strategy in that context. We would never say that this would be part of us. In fact, we say that part of our strategy is to optimize over time as to our footprints. Our focus is really on enhancing the value proposition to our customers in the multi-channel environment and I think you’ve heard me talk about this.

In Canada, we actually have a real strength in e-commerce. Canada is a different country. Anybody who thinks that it’s part of the great U.S. survey makes a mistake, big geography, so there is some changes. Best Buy has been an early starter in e-commerce in Canada. It in fact has a leadership position in that markets because of our history there. In fact, we go outside of consumer electronics on our e-commerce activities in Canada, including with luggage some products for moms, babies, and so forth. So that’s a big part of our focus there.

Mollie O'Brien

Are there any more questions here in the theatre?

Unidentified Analyst

President Joly and members of the board of directors, [Marti Kirsch] a shareholder and former President, a Mayor of the City of Richfield, what a pleasure of this to be here and to recall the days that we battle to bring Best Buy into the Richfield community and what are the blessing that continues to be we thank Best Buy for their contributions that they’ve made to the Wood Lake Nature Center to our school system within Richfield. And then probably the most interesting one is, Best Buy is the sponsor of our fireworks program.

So coming July 4, we would anticipate that all of you will join us at 66th Portland Avenue at Veterans Park at 10:00 PM to see probably the best fireworks presentation within at least this part of the metropolitan area. So we’ll expect to see all of you in attendance that evening to view the one of our presentation that we only have, because Best Buy is willing to sponsor that. Thank you very much.

Hubert Joly

Obvious to Mary, thank you so much and of course most – all of us you better than anyone understand the importance of my message about the Marketplace Fairness Act. Our communities are really dependent on this issue getting solved. There is in terms of urgency, I won’t repeat my speech, something I want to thank you for your very kind comments.

Mollie O'Brien

Anymore questions in the theatre?

Unidentified Analyst

I have two question. I’m sorry I don’t follow the financial pages, but how does your success compare with your two competitors target in Walmart? And second question is, what are you doing to prevent a Target type tobacco with security?

Hubert Joly

So how does our performance compared to Target and Walmart of course they compete in a much broader set of categories. So I won’t comment on their success in grocery, I wish them a lot of success in grocery. And obviously that’s most success in our category. We are very proud of our performance, I think we’re very proud of our value proposition, we think that what Best Buy has to offer, we talked about what we want to do already today. What Best Buy can offer to customers in terms of advice, service, convenience at competitive prices is actually very compelling, which is why we’re getting market share.

Last year at this meeting, I think, I very clearly laid out in response to a question of pricing strategy, I said, our strategy to be price competitive is to be price competitive. And having established that the value we bring in terms of advice, service, convenience is leading customers to increasingly buy from us, so we’re very proud of our performance in this area. Although Target being a local company we have a lot of friends and empathy for what’s there and empathy for Target as a member of this community of course, our concern we know less about, so I won’t comment about that.

As related to the breach that’s happened at Target, of course this was a very unfortunate event for us, so you can imagine that as a major retailer we’ve always been and have been and will be very focused on doing everything we can to protect the information from our customers. This is a constant battle as we would say from a geopolitical standpoint, we have enemies. The frequency and level of attacks is growing exponentially, these attackers are increasingly sophisticated, so it’s a constant battle and there’s no point at which we can rest on our laurels and so we’ll continue to in fact to protect information from our customers for sure.

Unidentified Company Representative

Unfortunately we don’t have any more time for the question-and-answer session. Thank you very much for your questions and I will turn it back over to Hatim.

Hatim Tyabji

Certainly on behalf of myself personally, Board of Directors and management, thank you for your support and thank you for attending our 2014 shareholders meeting today. We look forward to seeing you again next year. Have a really nice day. Thank you again.

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