Small Businesses and Small Businesses and International Stores:International Stores:

Key Growth Drivers For Best BuyKey Growth Drivers For Best Buy

Bear Stearns’ 12th Annual Retail, Restaurants & Consumer

ConferenceMarch 8, 2006

Tom HealyExecutive Vice PresidentBest Buy For Business

Safe HarborSafe Harbor

Cautionary Statement Pursuant to the Private Securities Litigation Reform Act of 1995This presentation may contain forward-looking statements, which are subject to risk and uncertainty. A variety of factors could cause our actual results to differ materially from the anticipated results expressed in such forward-looking statements, including, among other things, factors listed in our current report on Form 8-K filed with the SEC. That 8-K describes additional factors that could cause actual results to differ materially from those contemplated by the forward-looking statements made in this presentation.

28%

17%21%

38%

18%

30%

Annual Avg.Shareholder Return

Revenue (CAGR) EPS (CAGR)

5-Year 10-Year

• #1 consumer electronics retailer

• $30 billion annual revenue• $1.5+ billion operating

income for fiscal 2006• 17% U.S. market share• Fortune 100 company• Selling TVs, computers,

entertainment software, appliances

Best BuyBest Buy

TopTop--Line GrowthLine Growth

$30 BNew

Stores

Small Business

Customers

Services

Int’l

?

2006 2011

Two drivers that will extend our business: Small Business and International

Best Buy Model TransformationBest Buy Model Transformation

Employees essential to customer experience

Products marketed to the masses

Customer needs drive product selection and store experience

SEGMENT

Customer SegmentationCustomer Segmentation

Tech-savvy families

Small businesses

Busy suburban moms

Affluent professionals Young entertainmententhusiasts

Why Business Customers?Why Business Customers?

• Unique localized services and expanded assortments available via multi-channels, serving unmet needs

• Create new and improved customer experiences

Best Buy For BusinessCustomer Centricity Goals

• Trained and certified professionals catering to the needs of small business owners

• Improve overall customer satisfaction and loyalty

• Small business represents an $80 billion opportunity• These customers already shop at Best Buy for personal needs

• Identify and attract profitable customers to existing locations

Unique Position, Not Easily ReplicatedUnique Position, Not Easily Replicated

Competition• Fragmented• Inconsistent service

and product assortment

• Narrow range of capabilities and offerings

Best Buy• 900+ retail stores• Geek Squad agents• Product and service expertise• Multiple brands• Multi-channel business model• Strong brand with pre-

existing customer relationships

Changing the way small business buys IT solutions

Value PropositionValue Proposition

My Business is PersonalMake it Convenient

Pay Me Back

Business Technology

Pros andBusiness

Consultants

Geek Squad Service

Reward Zone For Business

Expanded Assortment

Community Networks

Integrated Business ModelIntegrated Business Model

.com

Direct Sales

Technology Consulting

Internet SalesMany Profiles

Individual Needs

Many Psyches

Commercial Sales

Retail

Stores

Our CustomerOur Customer

NearNear--Term PrioritiesTerm Priorities

1)Deploying BBFB to a broader geography

2)Currently 100 U.S. stores offer Best Buy for Business; planning to have 220 stores by end of fiscal 2007

3)Building our training and development capacity4)Adding nearly 600 trained business professionals5)Building outside sales capabilities6)Refining our offerings to more effectively meet

customer needs

Key to LongKey to Long--Term SuccessTerm Success

• Co-creation of technology solutions with customer and vendor partners

• Widely available technology experts in solutions for business, offering a local relationship

• Differentiated training and development capability for technology consultants and Geek Squad agents

Kevin LaydenPresident & Chief Operating OfficerBest Buy Canada

Canada is Key to Canada is Key to BBYBBY’’ss GrowthGrowth

?

$30 BNew

Stores

Small

Business

Customers

Services

Int’l

5.3%Best Buy Canada

Supply Chain

IT

OrganicGrowth

7.0%BBY Revenue BBY Operating

Income Rate

Today Goal FY’05 Goal

Best Buy Domestic & InternationalBest Buy Domestic & International

17%*144688Stores

N.M. 1.7%5.7%Operating Income Rate

3%*$49$1,393Operating Income

10%*$2,817$24,616Revenue

InternationalDomesticFiscal Year 2005($ in millions)

* Represents percentage of total Best Buy

Number of Stores

104 108 114 120

1930

95

44

8

2002 2003 2004 2005 2006

Future Shop Best Buy Canada

Future Shop:•Acquired in November 2001•Future Shop Web site is #1 consumer electronics site in Canada•Market share of approximately 20-22%

Best Buy Canada:•Opened Toronto store 8/2002•Opened stores in all major markets, including 8 bilingual stores in Montreal•Operate English and French Best Buy Web sites•Geek Squad in all stores•Market share of approximately 8-9%

Canadian Store Count and Revenue

Dual Brand Strategy Boosts ShareDual Brand Strategy Boosts Share

$2B*

$3.6B*

* Canadian dollars

Evolution of the Dual Brand StrategyEvolution of the Dual Brand Strategy

Progress so far

• 73% increase in store count by FY’06

• Revenue growth of 80% through FY’05

• Operating income rate up 150 bps

• Market share nearly doubled

Three-year goals

• Brand differentiation• Business model

optimization• Customer centricity

2001 2009

Brand DifferentiationBrand Differentiation

• Future Shop brand will retain its own imagery and customer experience

• Guiding principle: replicate U.S. Best Buy brand in Canadian marketplace

• Changes to dual brand operating structure• Brand architecture project initiated in late fiscal 2006

– Develop strategic framework to further differentiate the brands

– Ensure clear differentiation on the customer experience and employee experience

Business Model OptimizationBusiness Model Optimization

Canadian Operating Income Rate

FY ’05 Goal

1.7%Scale

Store Labor

Web,Services

Gross Profit

5.0%

Number of Stores

104 108 114 120

1930

95

44

8

2002 2003 2004 2005 2006

Future Shop Best Buy Canada

Results are EncouragingResults are Encouraging

• Initial Best Buy Canada stores’(Toronto and Edmonton) operating profits have dramatically improved

• Best Buy Canada’s operating profit lags Future Shop’s:– Higher advertising expense

and overhead due to early stage of launch

– Maturity curve of stores• Supply chain work beginning• Leveraging enterprise to

improve operating income rate

Canadian Store Count

Customer CentricityCustomer Centricity

• Best Buy Canada selectively pulling Customer Centricity elements:– Geek Squad in Best Buy stores, 6 stand-alone units– Best Buy for Business locations

• Best Buy Canada in early stages of segmentation analysis• Common tools with U.S. but different segments:

– More than 30% of greater Vancouver population is of Asian descent

– 90% of Montreal population speaks French• Building capacity for labs in fiscal 2008

Key Growth AreaKey Growth Area

?

$30 BNew

Stores

Small

Business

Customers

Services

Int’l

5.3%Best Buy Canada

Supply Chain

IT

OrganicGrowth

7.0%

BBY Revenue

BBY Operating Income Rate

Today Goal FY’05 Goal

Your QuestionsYour Questions