Operator: Welcome to Best Buy's Fourth Quarter Fiscal 2013 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. As a reminder, this call is being recorded for playback and will be available by 12.00 pm Eastern Time.
I would now like to turn the conference over to Bill Seymour, Vice President of Investor Relations.
Bill Seymour - VP, IR: Good morning, and thank you for joining us on our fiscal fourth quarter 2013 conference call. As usual, the media are participating in this call in a listen-only mode.
Let me remind you that comments made by me or by others representing Best Buy may contain forward-looking statements regarding what we will expect, plan, or intend to do in the upcoming year and beyond. It is important to keep in mind that any such statements remain subject to risks and uncertainties. Our SEC filings contain additional information about factors that could cause actual results to differ from management's expectations.
Please note that our reported results this morning include non-GAAP financial measures. These results should not be confused with the GAAP numbers we reported this morning in our earnings release or with the GAAP numbers we will report in our 10-K. For GAAP to non-GAAP reconciliations of our reported to adjusted results and guidance, please refer to the supplemental schedule in this morning's news release.
As a reminder, to assist you with your modeling fiscal 2013 was a 53-week year versus 52 weeks in fiscal 2012. The extra week in fiscal 2013 was in the first quarter. The extra week of fiscal '13 added approximately $700 million or 1.5% in revenue or $0.12 or 3% in non-GAAP EPS.
Now, I'd like to turn the call over to Hubert Joly, our President and CEO.
Hubert Joly - President and CEO: Good morning, everyone, and thank you for joining us. I would like to begin today with an overview of our fourth quarter results and our priorities for fiscal 2014. Then I will turn the call over to Sharon McCollam, our new Chief Administrative and Chief Financial Officer, to provide further details.
But before we get started, I'd like to officially introduce Sharon to all of you in her new role. As many of you know, Sharon joined us in early December. She came out of retirement after serving for many years as the Chief Operating and Chief Financial Officer with Williams-Sonoma. Since she joined us we've expanded her role, and she is now leading our finance, IT, real estate, and supply chain operations. Now, of course, her in-depth expertise in these areas has made her an instantly powerful contributor to our transformation and we are thrilled that she is here. So welcome, Sharon.
I would now like to talk about our better than expected results for the fourth quarter. Our revenue growth of 0.2%, we delivered non-GAAP diluted earnings per share of $1.64. Adjusted free cash flow for the year reached $965 million, as we aggressively reduced inventories and focused on working capital and cash flow management. We ended the year with $1.8 billion in cash.
To deliver these results, renewed momentum in the Domestic business more than offset continued softness in International. Domestic comparable store sales increased 0.9%, with an overall 10 basis points decline in the gross profit rate. Domestic online revenue increased 11%. So, these better than expected results were driven by a compelling assortment of new products in key growth categories, increased Blue Shirts training, higher customer engagement in our retail stores and impactful traffic generating marketing initiatives.
It was a quarter that was driven not given and we are encouraged by the intensity, collaboration and momentum that was generated by both our frontline and corporate teams as we began to execute against our Renew Blue initiatives.
Now, looking at to build on this momentum in fiscal 2014, we remain focused on the two problems we have to solve, stabilizing and in improving our comparable store sales and increasing profitability across our global businesses. We recognize, however, that 2014 is a year of transition and that further investment will be required to advance our Renew Blue transformation.
To achieve this, I'd like to highlight six of our Renew Blue priorities that we will be pursuing in fiscal 2014, including; number one, accelerating online growth; number two, escalating the multichannel customer experience; number three, increasing revenue and gross profit per square foot to enhance store space optimization and merchandising; number four, driving down cost of goods sold through supply chain efficiencies; number five, continuing to gradually optimize the U.S. real estate portfolio; and number six, further reducing our SG&A cost. In addition, improving the performance of our International businesses will be another key priority. All of these priorities are currently underway and we expect each of them to deliver gradual and incremental operating improvements throughout the year.
I'd now like to provide additional color on each of these priorities. To accelerate online growth, we intend to improve online traffic and conversion through a number of activities; number one, building a unified view of the customer across our various platforms so as to dynamically generate online recommendations for products and shopping information based on customers' needs and preferences; number two, implementing a new search platform that helps customers find products more easily with increased relevance; number three, creating product pages that have an integrated and consistent browsing experience across all devices; number four, enabling a single seamless access rewards and points management and redemption capabilities versus the current segregation between BestBuy.com and MyRewardZone.com; number five, creating an easy process for customers to add additional products and services like warranty and Geek Squad support to their in-store pickup experience; and number six, increasing our product assortment and enhancing product information. We expect to implement these changes by next holiday.
The second priority is to escalate the multichannel customer experience. In addition to the functionality improvements what we're making online, we've introduced a new metric to track customer service levels known by many of you as Net Promoter Score or NPS. NPS will measure not only the satisfaction of customers that buy but also the customers who don't. In November at our Analyst Day, we discussed Best Buy's customer promises. As a reminder, these promises include offering the customer the latest devices and services all in one place, impartial and knowledgeable advice, competitive prices, the ability to shop when and where they want, and support for the life of their products. To ensure that these promises are upheld we have defined key performance indicators that measure our progress on a monthly basis and we are pleased to report that since November, our Net Promoter Score has increased by 200 basis points. We're seeing increased customer satisfaction pertaining to our sales associates, our service, and price perception.
Looking ahead, we remain relentlessly focused on driving customer satisfaction through better in-store performance across our various channels; improve price perception through our low price guarantee, higher personalization of online offers, and the reallocation of store labor hours to customers-facing activities.
The third priority is to increase revenue and gross profit per square foot through enhanced store space optimization and merchandising. This year, we will reduce space allocated to the negative growth and low margin CD and DVD categories and replace it with higher growth categories like mobile, appliances, and accessories, and to support these expanded categories, we will deepen the product assortment, increase Blue Shirts training, and reprioritize marketing investments.
The first priority for this year is to drive down cost of goods sold through supply chain efficiencies. Our first initiative here is to continue to develop our multichannel capabilities as we continue to grow our online business, and to drive this, we will expand our online fulfillment into all of our existing distribution centers and improve our allocations of inventory in order to get the inventory into the distribution center closest to the customer.
Additionally, we'll be consolidating orders for parcel and refining order management to fill orders from optimal locations. All of these initiatives will result in improved service levels to the customer and reduced shipping cost.
Another priority for supply chain will be to reduce expenses by driving transportation efficiencies. To achieve this, we are significantly improving information sharing, collaboration and root planning with our carrier partners to send fuller trucks and reduce empty miles. Lastly, we are reviewing our product movement to identify opportunities to alter product flows and transformation methods to further reduce our expenses.
Our fifth priority is to continue to gradually optimize our U.S. real estate portfolio, Occupancy cost reductions continue to be a key focus and we made significant progress in fiscal 2013 in both the area of store closings and renegotiated leases. In fiscal '13, we permanently closed 49 large-format stores and expect to close an additional five to 10 large-format stores in fiscal 2014.
Additionally, we are being very rigorous about capital allocation and have extended the timeframe by which we are measuring the performance of new prototype stores. This includes all formats, including our Richfield prototype store, our Magnolia and Pacific Sales stores-within-a-store, and our Best Buy Mobile standalone stores.
There are, however, a small number of selected and opportunistic markets where we are planning to move forward with new stores, including 12 new Best Buy Mobile stores, 10 Magnolia Design Center stores-within-a-store, and 18 to 25 Pacific Kitchen & Home stores-within-a-store.
Our sixth priority is to further reduce SG&A cost. Over time, we believe there is an opportunity to remove $400 million in costs from the $4.2 billion in annual North America G&A expenses. Over the last several weeks, we have executed Phase One of these reductions totaling $150 million in annual savings, which included an initial headcount reduction of approximately 400 people. These savings are being driven by the discontinuation of non-core activities, the takeout of management layers, and various efficiency improvements including the removal of organization silos that have driven costs and undermined accountability and decision making. In addition to this $150 million cost takeout we expect additional costs to be eliminated in the second quarter and later this year. We're continuing to systematically and aggressively challenge all elements of our SG&A cost structure in pursuit of a materially lower cost based.
Now, if I need to improve the performance of our International businesses, particularly in Canada and China, we have the same two problems to solve as we have in our Domestic businesses, declining comparable store sales and declining operating margin. So, as an example, in Canada and China, we have a significant decline in comps and operating income due to other industry softness and increasingly competitive micro environment in an overweight cost structure. To begin addressing these issues, in fiscal '13, we closed 50 stores in Canada and five in China. In addition, under the leadership of Shari Ballard, our EVP and President of International, we will be letting out renewed initiatives for our International businesses in fiscal 2014.
Collectively, all of these renewed priorities are driving a commitment to action and accountability as our management team focuses on one Best Buy. And to further this alignment we have implemented a new management incentive program for all leaders that prioritizes the resolution of the two problems we have to solve, improving comp store sales and increasing profitability. This incentive scheme also prioritizes measurable improvements in the customer experience, the growth of our online business, and the achievements of further SG&A cost reductions. We believe that aligning the incentive program with the goals of Renew Blue will significantly elevate our success and drive enhanced shareholder value.
I will now turn the call over to Sharon to cover more details on Q4 and our outlook for fiscal 2014.
Sharon McCollam - EVP, CAO and CFO: Thank you, Hubert and good morning. As Hubert shared earlier in the call, our fourth quarter results did exceed our expectations and we are encouraged by what that says for our opportunities in 2014 and beyond as we continue to make progress on our Renew Blue initiative.
The P&L highlights that drove these results are as follows; enterprise revenue increased 0.2% to $16.7 billion, primarily driven by 0.9% comparable store sales increase in the Domestic segment, partially offset by a 6.6% comparable store sales decline in the International segment.
In the Domestic segment, total revenue declined 0.3% to $12.6 billion. But this decline was driven by the loss of revenue from 49 big box stores that were closed earlier in the year but was substantially offset by the positive 0.9% comparable store sales increase previously discussed and incremental revenue from 126 additional Best Buy Mobile standalone stores.
It's important to note, however, that this fourth quarter's comparable store sales were benefited by an estimated 35 basis points due to a calendar shift in this year's pre-Super Bowl sales from Q1 of fiscal '14 to Q4 of fiscal '13.
Domestic online sales increased 11%, reaching a record $1.3 billion as momentum accelerated throughout the quarter. Highly effective traffic generating marketing initiatives drove these better than expected results. From a merchandising perspective in the Domestic segment, strong growth in mobile phone, tablets/eReaders and appliances was partially offset by declines in gaming and digital imaging.
In the International segment, total revenue increased 2% to $4.16 billion versus $4.09 billion last year. This increase was driven by the positive impact of changes in foreign currency rates, partially offset by the previously mentioned 6.6% decline in comparable store sales. From a country perspective, positive comparable store sales in Europe were more than offset by double-digit declines in Canada and China. In Canada, overall industry softness drove this decline. In China, however, increased competition from e-commerce and year-over-impact from expired government stimulus programs were the drivers.
Turning now to gross profit, the adjusted fourth quarter enterprise gross profit rate declined 60 basis points to 22.6%, including a 10 basis point decline in the Domestic segment and a 210 basis point decline in the International segment. In the Domestic segment, the fourth quarter adjusted gross profit rate was 22.4% versus 22.5% last year. This 10 basis points decrease is a net impact of two business drivers. The first which represents a 40 basis point decrease, is higher promotional activity principally in home theater, that was partially offset by lower sales in gaming which sells at a lower gross profit rate. The second is a 30 basis point benefit from a periodic profit sharing payment that was earned by the Company based on the long-term performance of the Company's externally managed extended service plan portfolio.
In the International segment, the fourth quarter gross profit rate was 23.4% versus 25.5% last year. This 210 basis points rate decline is primarily driven by a lower gross profit rate in Europe. In Europe, the decline was driven by a higher percentage of revenue coming from the wholesale channel and an unfavorable product mix in addition to greater promotional activity. The International segment's gross profit rate was also negatively impacted by phone carrier and other periodic payments that were earned by the Company in the prior year that did not recur in Q4 of fiscal year '13.
Adjusted fourth quarter enterprise SG&A as a percentage of revenue increased 100 basis points to 17.1% with 140 basis points increase in the Domestic segment and a 10 basis point decline in the International segment. In the Domestic segment adjusted SG&A expenses were $2.07 billion or 16.5% of revenue versus $1.9 billion or 15.1% last year. This 140 basis point increase was primarily driven by increased investments in advertising and other direct selling costs to drive in-store and online revenue, a reversal of incentive compensation expense in the prior year that did not recur in Q4 fiscal '13, an increase in field incentive compensation and executive retention and transition costs, and a year-over-year increase in legal-related reserves.
In the International segment, SG&A expenses were $791 or 19% of revenue versus $782 million or 19.1% last year. This is 10 percentage point decrease was primarily driven by overall lower costs, partially offset by the negative impact of changes in foreign currency exchange rates.
Adjusted free cash flow was $965 million for the year versus the most recently provided guidance of $500 million. This better than expected result was driven by three factors; an aggressive inventory reduction plan and an intense focus on working capital and cash flow management initiatives that were implemented after the Company's last financial press release, a higher than expected mix in the European business of inventory purchases for business-to-business sales activities that carry substantially longer payment terms and the impact of better than expected fourth quarter earnings.
Before we move on to discussing next year, let me touch on the non-cash impairments and restructuring charges that were excluded from our non-GAAP earnings. First, we recorded a non-cash impairment charge of $822 million, primarily to reflect the write-off of goodwill for Canada and China, as recent economic and competitive pressures contributed to a worse than expected fourth quarter performance and led to lowered long-term outlooks for both countries.
The same factors that resulted in the goodwill impairments also led to higher than normal non-restructuring, non-cash asset impairments, which were included in the SG&A line and totaled $44 million, including $9 million related to Domestic segment assets impairments.
The Company also recorded restructuring charges totaling $203 million in Q4 of fiscal '13, primarily related to previously announced store closures in Canada and Europe in addition to severance charges associated with the Renew Blue SG&A cost reduction initiatives outlined previously.
Of this $203 million approximately $140 million is expected to be paid out in cash, primarily over the next two years. For a full GAAP to non-GAAP reconciliation, please see the schedules in today's press release.
Now looking forward to fiscal '14, Best Buy is at the beginning of a major transformation. As Hubert said, this year will be a transition year, a year in which we will be taking out cost as best as we can, but also a year in which we will be simultaneously making substantial investment in Renew Blue initiative that we believe will deliver significant long-term returns.
To support these initiatives, we are expecting capital spending in fiscal year 2014 to be in the range of $700 million to $800 million, and incremental SG&A investments to be in the range of $150 million to $200 million. These investments will be principally in the areas of online, mobile, and the multichannel customer experience, in addition to non-recurring cost associated with the insourcing of IT expected to be completed in fiscal '14 and the replatforming of bestbuy.com expected to be completed in fiscal year '15.
These incremental SG&A investments, however, are expected to be substantially offset by our Renew Blue cost reduction initiatives, including the $150 million of Phase One reductions that were enacted over the last several weeks and the additional reductions that we are expecting to announce in the second quarter and later this year.
From a revenue and earnings perspective in fiscal '14, we will not be providing financial guidance. Directionally, however, we do expect the first quarter to be under significant pressure due to; one, the absence of an additional week and the impact of this year's pre-Super Bowl sales shifting into Q4 versus Q1 of fiscal '14, which is an approximate impact of $0.14 combined in diluted earnings per share; number two, a less favorable product and services mix in the Domestic segment due to the timing of high philosophy product launches that occurred in Q1 of fiscal '13 that are not expected to recur in Q1 of fiscal '14; number three, the first quarter carryover effect of sales and marketing investments that were implemented in mid fiscal year '13; a greater investment in price competitiveness, including the impact of the Company's recently launched price-match program; and five, the timing and impact of capital and SG&A investments that are hitting the P&L today versus the timing of the realization of the benefits, including the in-sourcing of IT and the re-platforming of BestBuy.com.
But despite these first quarter financial pressures, the energy in the organization around the successful execution of Renew Blue initiative is so inspiring. Our fourth quarter results and the actions that we've taken since then to begin rationalizing our infrastructure, had given the organization something that they have not had in a long time, pride in the outcome and a belief in what is possible.
Our fourth quarter results have also affirmed what Hubert shared at the November Analyst Day and what I knew to be true when I joined the Company. Best Buy is the market leader in a highly fragmented and growing market. We have a powerful platform from which to deliver a superior multi-channel shopping and service experience to our customers. And while already the 11th largest e-commerce retailer in the U.S. Best Buy is underpenetrated from a market share perspective and early investment returns and the momentum we have seen in the channel validate the potential of this significant growth opportunity. And the runway to improve financial returns, to increase online growth, enhanced retail execution and extensive structural cost reductions is tremendous.
I will now turn the call back to Hubert.
Hubert Joly - President and CEO: Thank you so much, Sharon. Before we go to Q&A, I wanted to give you a quick update on the process with our founder Dick Schulze. So yesterday, was of course the deadline for Dick to make a qualified offer and no such offer was received. During the process, Dick introduced to the Company several impressive private equity sponsors who all expressed interest in an investment in Best Buy.
Now, the costs of these investments, however, were determined to be excessive, and dilutive to our existing shareholders. Therefore, the Company concluded to not accept these offers. Despite the significant amount of time that management has spent on this process, the organization has remained focused on our Renew Blue transformation and we will continue to do so as we move forward for the benefit of all of our stakeholders.
So, I'll now turn the call over to the operator for Q&A.
Operator: Kate McShane, Citi.
Kate McShane - Citi: My question is surrounding the price-matching program that you're going to put in place or best be put in place during holiday. I wondered if you could compare and contrast what we have done during holiday versus what we can expect to see this year and if there were any learnings during holiday that you learned?
Sharon McCollam - EVP, CAO and CFO: Hubert, would you like to take that question?
Hubert Joly - President and CEO: Yes. The line was not very good. I think your question pertains to our price-matching activities during the holidays and our strategy going forward. So this is a decision we made in October to make sure that we enhance our price competitiveness and fight the so-called showrooming phenomenon. Our Blue Shirts teams in the field have been very excited about this program. The customers have been very engaged in this program, and we believe that it has helped improve our price perception during the program. So, we've been very excited about it. In terms of impact on our margins, there was a big concern, right, there in terms of the impact it would have. The impact has really been minimal, because in general terms, actually our prices are quite competitive. And, as you know, we've decided to move from the pilot to a policy. So, the situation now is that we're matching both online and in the stores. We've actually expanded the price-matching policy to cover essentially all product categories, including accessories and hardware and software. There is very few exceptions to the policy. The fact that we're going to make this is a policy and make it permanent may increase the cost a little bit, so that's a factor that we have in mind. But we are Best Buy and we are determined to be the Best Buy for our customers. And, of course, our value proposition to the customer is not just the price, it's all of the price customer promises, and we like the response we're getting from customers.
Operator: Anthony Chukumba, BB&T Capital Markets.
Anthony Chukumba - BB&T Capital Markets: So, my question was on the free cash flow. You significantly reduced your guidance. I know you've reported the holiday sales results and there you came out way, way, way better than that. I was just wondering – I know there was the color in the press release, but if you can give us any additional color, because I know that there was some concern that maybe it was because the vendors were cutting back terms and so I would just love just a little bit of additional color in terms of what you were able to do to almost double your free cash flow guidance.
Sharon McCollam - EVP, CAO and CFO: Anthony, this is Sharon and I'll take that question. In order to that, obviously, I have just joined the Company when we released the previous cash flow guidance and we had at the time I joined, we were discussing and the organization was already discussing actions to take that relates to working capital management. So, subsequent to that time, there were several things that we did that drove this and the biggest of them – and then there was one that is not driven, it is a result of a business change in Europe. So, let me walk through them in a little more detail. First of all, the inventory ended lower than we anticipated and a portion of that was the additional sale. But in addition to that, we did an entire study of a layer of our inventory that was very slow moving and that was eligible for return to vendor. So, we had a full core press in the organization on taking this non-productive working capital and returning it to vendors. Now, this is a process that when you think through it, you go from the store to a regional center, from the regional center to the vendor. The paperwork has got to be intact and then you can legitimately deduct that from payables that you would owe to the vendors (of) turning it into cash. So, to have guided a process that we had not historically executed, now of course has become part of our baseline execution would have been probably a little bit premature, but the execution of this yielded well over $300 million of additional cash flow. So, we were thrilled with the execution across the organization, (that was so core press) and that was one driver. The next second driver is that if you recall from my prepared remarks, in Europe, we talked about the fact that they had a significantly higher mix of wholesale sales during the quarter, and as part of this business-to-business sales effort activities being so much higher than anticipated, the payment terms on inventory purchases associated with the B2B business are substantially longer. So, Europe delivered a substantial benefit – International and general delivered, but it was all really came out of Europe and that brought in virtually – actually a slightly more than the balance. And then, of course, because of our stronger performance, we did have some slightly higher receivables which were the offset. So, that is what drove it. It was pure operational execution. And then on top of that, Anthony, the smallest piece, but truly, is aggressive cash management. We, as a company, have not – necessarily have the disciplines in place around that area, and, of course, going forward again, we're building into our processes a much more thoughtful approach to cash management with all of our vendors, and I'm not just talking about vendors associated with our inventory processes, but our – we do a lot of purchasing as you can tell from our SG&A initiative around (we haven't done) anything to do with product for resale. So that's another area that we've gone after.
Hubert Joly - President and CEO: Sharon, do you want to touch on the vendor terms? That was a question from Anthony about changing vendor terms or concern about this, which, of course, is not the case. You want to maybe make that point?
Sharon McCollam - EVP, CAO and CFO: Yes, we affirmed that in fiscal '13, there were no changes in vendor terms. I know that people were trying to get their head around this and they're trying to understand it, but that has nothing to do with the $500 million. It all had to do with bringing the inventory in earlier because of the calendar and all of the things that we talked about in our last press release were exactly how it came out. Had we not done this aggressive return of slow moving inventory that had return capabilities with the vendors; this number would have been back into that range if you take out the benefit from the shift in revenue in Europe to wholesale.
Operator: Greg Melich, ISI Group.
Greg Melich - ISI Group: On the Domestic SG&A, it was up 9% in the fourth quarter and you described it in dollar terms. It seems like some of it's sort of just transitional and cycling some reversals from a year before, but a lot of its ongoing as well. Could you help us understand the balance of how much that 9% dollar growth you think is ongoing as opposed to just the cycling issue?
Sharon McCollam - EVP, CAO and CFO: Yes, Greg, your question cut out a little bit, but I think what your question was, is in the SG&A that we reported in the fourth quarter, it was up substantially or a bit more than you might have anticipated and you wanted to know how much of that was going to continue into 2014. So, I will answer that question and if that's not right, you can come back and help me with that question. As far as the changes, what we talked about in the press release is that there was a credit last year that did not recur this year. We also, in the fourth quarter, had some legal reserves that we had recorded that of course, we don't have those frequently. So, there were some things that were unusual that way. As I look at the SG&A, I perhaps would be more effective in answering this question by stepping back and just talking about SG&A and talking about our SG&A cost reduction initiatives. My early observations having been here just now a short time, but in total agreement with Hubert is that the SG&A infrastructure at Best Buy is too high. There are some investments in the numbers that we are looking at in Q4 related to the Renew Blue field compensation plan that was put into place and there are investments right now in Q4 that are related to this IT transition. We're insourcing aspects of IT and doing other insourcing and we've got double costs. Those will now continue. But looking at the cost base just in general, it is not in any way optimized, and we have significant incremental opportunity, the $150 million was our first step at reducing the cost, and it's not all about headcount. A significant piece of this is going to come from non-payroll and benefit related reductions and it is going to come gradually and incrementally during the year. So, in Q1, we are hit really hard with this base of cost that was added early last year that we are not – we'll not be continuing in our cycle. We've taken out a piece of it, we're going to take another piece and we are already prepared to announce additional reductions for Q2, which we will talk more about in a few weeks or so from now or next release and then we have additional reductions with the cadence throughout the balance of the year. So, to summarize, I would say there is a piece of this that will continue and then you'll see gradual and incremental reduction. Q1 is going to have a lot of pressure. Q2 still has pressure. We are going to have the charges associated with taking the costs out. Then Q3 and Q4 we're going to be slimmer and we will continue to take costs out going forward.
Operator: Gary Balter, Credit Suisse.
Gary Balter - Credit Suisse: First of all, just one clarification on the earlier question that was asked on price-matching, because when you go on your site, it doesn't mention matching online, but some of your Christmas stuff was matching online. So, what's the policy now going forward?
Hubert Joly - President and CEO: So, let me be very clear. Our price-matching strategy applies both online and in the stores. You see it under the words low price guarantee, Gary and first of all, let me thank you for visiting our site. I hope you're buying.
Gary Balter - Credit Suisse: Well, I didn't have the guarantee, so I couldn't buy and I just couldn't…
Hubert Joly - President and CEO: So, would you like to tell me what SKU you'd like to – would you like to tell me what SKU would you like to handle just now? We're very customer-focused as you can see. The low-price guarantee is the word for the price match and you see it on the sites, and I'll double-check right after this call myself so that – because I am concerned about what you're saying, but there'd be no doubt. The price matching is both online and you can get it online and in the stores and it covers, of course, our brick-and-mortar competitors as well as our online competitors.
Gary Balter - Credit Suisse: And then just a question, could you talk about your progress on the website? Like you obviously laid it out is as one of the priorities. Could you tell us like where you are in terms of progress on that and how long you see that taking in terms of getting to a site that you're comfortable with?
Hubert Joly - President and CEO: So, this is going to be a dual-process. One part of the process is to work with the existing sites and make gradual incremental progress. As mentioned a number of things, we're going to be focused on and we'll be ready for next holiday, and this will continue. So, this deals with the interaction with the customers, it deals with search, it deals with the assortments, it deals with integration. One of the surprises has been the fact that we have these multiple site, bestbuy.com, MyRewardZone.com, GeekSquad.com, that have not been integrated, and so the customer experience, talking about multichannel, even multi-websites, it was not integrated. So, we're addressing that with the existing infrastructure. And then in (power) to this, we will be – we'll have a project to reconstruct, redevelop a new platform, and as you would expect, that takes longer. We expect this to probably take a couple of years, roughly speaking, which is why of course, we don't want to wait a couple of years and we'll have this dual track. So, keep shopping during the year. Expect next holiday some wonderful enhancements and then continue coming back and providing us feedbacks.
Gary Balter - Credit Suisse: Just to calm you down here and make you happy, I did buy a 55 inch Samsung TV just before the Super Bowl at your store. So, I am spending money at Best Buy.
Hubert Joly - President and CEO: Gary, I couldn't be happier and I'm actually looking at the site on my iPad and you can see, low price guarantee. It says, we'll match prices on qualifying products, see details and so forth. But the low price guarantee, it's on the front page on towards the left in the bottom third of the page.
Operator: Chris Horvers, JPMorgan.
Christopher Horvers - JPMorgan: Holistically, can you talk about the outlook for Domestic gross margin as you ahead? It seems like there was only that one warranty item that was not sustainable. So, do you think we've reached a point, we've got the smartphone mix issues behind us, have we reached stabilization and if not, what would be sort of the puts and takes as you look ahead that could sway us from current levels.
Sharon McCollam - EVP, CAO and CFO: Chris, this is Sharon. I'm going to take that question. I think that you have to take a look at 2013, the fiscal year, and look at it by quarter. And what you saw throughout the year was the more competitive environment playing out in the gross profit rates. So, now, we've gotten into Q4 and what we believe is that we will continue – Q4 was a more promotional quarter especially in Europe. So, when you're looking at the enterprise level, I'm talking about the Domestic business now. When you look at Q4, we believe that coming off of that level, you are going to start seeing stabilization in that margin and our hope would be through our supply chain and our cost efficiencies and cost of goods sold initiatives under Renew Blue, that we can improve that. But this is going to be the challenge for Q1. It was throughout the year that we saw the competitive pricing environment escalate and up against Q1, we are going to have a challenge in the gross margin because last year was so much stronger. So that's how you should think about it going forward. But just to put that – I'm not giving guidance, but to just point it out to all of you so that you can model, please take a look at that and you're going to see what I'm talking about.
Christopher Horvers - JPMorgan: So when you sort of look back in time and we think about what typically what 4Q margin looks like, that's sort of basis that we build backwards from basically?
Sharon McCollam - EVP, CAO and CFO: I think Q4 was – because of the impact that we saw from Europe and some other things, I think it was a little bit lower, but yes, you need to take a look at how the year progress and now we feel that we are in a place where we can start stabilizing and building.
Hubert Joly - President and CEO: I want to come back one second on Gary's question about the price-match to be very precise, which is the movement from (indiscernible) face of our price-matching to the permanent policy is matched third. So, in the stores, if a matched third that you'll see the new signage and so forth, but that's just a transitional and a precise point.
Operator: Joe Feldman, Telsey Advisory Group.
Joe Feldman - Telsey Advisory Group: Wanted to also dig into the Internet a little bit and the e-commerce sales. I was just curious the complexion of what you saw in e-commerce relative to the stores in the past quarter in terms of maybe the types of products you're selling online, did you see any changes from prior quarters? Had you seen any change in profitability? And how you're thinking about the capital deployment going forward among that CapEx spending? How much is going towards e-commerce this year?
Sharon McCollam - EVP, CAO and CFO: Hubert, would you like to take that question on online?
Hubert Joly - President and CEO: Yes. I love your question because online is always number one in our thoughts. That's a huge area of emphasis for us. So, online, of course, we saw good growth in tablets, phones, and accessories during the quarter. Down the road, we'll sell to customers the way they want to buy, and of course simpler products will be sold probably primarily online and more complex products will be sold more in the stores. And, of course, the customers will have the choice. We are focused on growing online as well as expanding the profitability of online. We have the firm believe that at the end of the day online and the stores should have the same level of profitability. So, some of the emphasis going forward will have to do with increasing – improving the basket online, including one thing I mentioned which is the ability, the easier ability to buy our services online as well as expending the basket through recommendation. So, lots of opportunities there. In terms of the investments, we've said with Sharon, we're going to be very disciplined around the allocation of capital with a view to enhancing our return on invested capital. So, we know what our priorities are and that makes it easier. So online is an area of emphasis from a CapEx standpoint, notably from an IT standpoint and we are focused on driving that. We understand that both from a OpEx and CapEx standpoint, the fact that we're going to have these investments in the two platforms, the existing platform and the new platform, will create a bit of a bump, if you will, but we're determined to do the right thing provided that we keep this focus on return on invested capital.
Sharon McCollam - EVP, CAO and CFO: And Hubert, I might just add one more highlight on dotcom for the fourth quarter, which is, on top of that 11% growth, we also had an improvement in the gross profit rate. So, despite the investments we've made in the marketing and price match, we did start seeing an improvement in the profitability and the gross profit in the online business, which of course, is also very encouraging as we start making these investments. So, thank you.
Hubert Joly - President and CEO: Just before we conclude, I would like to, of course, share our excitement about the early momentum we're seeing here and thank you for your support. This is going to be a very exciting journey. We're going to have ongoing dialogs around this. We look forward (indiscernible) to continuously updating you on our progress and our building momentum. So, thank you for your support and continued interest.
Operator: Thank you. Ladies and gentlemen, that concludes today's Best Buy's fourth quarter of fiscal 2013 earnings conference call. Thank you for your participation. You may now disconnect.