Best Buy : Annual Report Fiscal 2022

A message from

Corie Barry, CEO

Dear fellow shareholders,

Fiscal 2022 was another record year for Best Buy. Our leaders continued to drive new ways of operating and our employees worked tirelessly to support our customers' technology needs in knowledgeable, fast and convenient ways helping us produce record revenue and earnings.

The safety and well-being of our employees and customers was again incredibly important for us throughout the year as we navigated the prolonged impacts of the pandemic while taking significant steps towards building our future.

When we entered the year, we discussed three concepts that we believe are permanent and structural implications of the pandemic, and that continue to shape 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 to lead - not follow.

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

• • Technology is a need and is playing an even more crucial role in peoples' lives.

Our purpose to enrich lives through technology is more relevant today than ever and represents the basis for how we deliver value to our customers, employees, shareholders, and the communities we live in. Technology is a necessity that isexpanding into all parts of our lives and homes. The ways we work, stream content, monitor our health from the comfort of our homes, or watch the metaverse come to life have forever changed us.

And while we started as a music retailer selling fun-to-have products, we are now focused on delivering our vision to personalize and humanize technology solutions for every stage of life. While others sell some of the same products we do, we alone offer the complete technology solutions and support, across manufacturers and operating systems. We are the only company, in all channels and at scale, that can inspire you with technology's possibilities, design your personalized solutions, install and connect all of it, keep it working when issues arise and help you responsibly get rid of it when it is no longer needed. These strengths appeal not only to our customers, but they are also unique and investable for our technology vendors, marketing partners, small business and education relationships, and other strategic connections.

In fiscal 2022, we not only sharpened our view of what it takes to deliver on our purpose in this evolving landscape, we took meaningful steps in advancing the priorities that support it.

We piloted numerous store formats to test and learn, helping frame our approach to our store portfolio and customer experiences. We

introduced new technology tools designed to support both our customers and our employees. We launched a bold new membership program called Best Buy Totaltech that significantly elevates our customer experience. We elevated our focus on our existing advertising business, building new capabilities to help vendors effectively reach our customers. And we acquired two companies, Current Health and Yardbird, that provide assets critical to the execution of our long-term strategy.

Our employees did an amazing job throughout the year, expertly managing an ever-changing environment to bring in products our customers needed. In fiscal 2022, we reached our fastest package delivery speeds ever and are now an industry leader in fast and convenient product fulfillment for our customers. In fact, the percent of online orders we delivered in a single day was twice as high as pre-pandemic levels - even as our online revenue was 34% of our domestic revenue and up 115% compared to two years ago.

These strong results were made possible by the investments we made in the last several years in supply chain, store operations, technology and, most importantly, our people.

Make no mistake, our amazing associates across the company were the driving force behind these results. Over the past 24 months, they have flexibly dealt with rapidly changing store operations as we responded to impacts from the pandemic, created safe environments for our customers and provided excellent service. In fact, despite all the changes throughout the year, we delivered improved customer satisfaction scores both online and in our stores. I am truly grateful for, and continue to be impressed by, our associates' dedication, resourcefulness and flat-out determination.

Investing in our people, from their careers to their well-being, is more important than ever. We increased our average wage rate 20% in the last two years by raising our minimum wage to $15 an hour and shifting some of our employees into higher-skilled and higher-paying roles. In fact, the average wage for our field employees is now more than $18 an hour. And since we started our flexible workforce initiative in 2020, 80% of our talented Retail Store associates are now skilled to support multiple jobs inside our stores, providing them the opportunity to gain new skills, further their careers and create an amazing customer experience.

With all of this in mind, we are incredibly proud that our field turnover rates remain significantly below the retail average and are near our pre-pandemic turnover rates. Additionally, our store general manager turnover is just 6%, which is even lower than what we saw pre-pandemic. It's clear that we have store managers who are vested in their employees, their paths, their well-being and their communities.

We continue to invest in benefits designed to support our employees and their loved ones in all aspects of their well-being including physical, mental, financial, and work-life balance. We implemented six weeks of paid leave for physical or mental health reasons, which combines with Caregiver Pay to provide extended pay during maternity leave. We expanded our caregiver support benefits and leveraged our HOPE Fund to provide financial assistance to employees going through difficult times. We also maintained our focus on pandemic-related benefits by providing COVID testing and sick pay, encouraged vaccinations through time off and cash awards, and conducted onsite vaccination and flu clinics. Finally, we continued to support our employees with mental health benefits and tuition assistance. In the past two years, we have invested more than $400 million in enhanced employee benefits and COVID-related pay, bonuses and benefits. As we enter fiscal 2023, we'll continue to invest in all areas of well-being to support our employees and their loved ones.

As a purpose-driven company, we continued to deepen our commitment to our community and the environment. We believe that our Environmental, Social and Governance efforts are not just the right thing to do, but directly tied to long-term value creation. During fiscal 2022, we made significant commitments to drive supplier diversity, expand our Best Buy Teen Tech Center program and reduce our carbon footprint. We have provided more detail on our initiatives in a subsequent section of this letter.

We are honored to be recognized for these efforts. For the seventh year in a row, Best Buy was named to Fortune's list of the World's Most Admired Companies, where we ranked third in the category

"We increased our average wage rate 20% in the last two years by raising our minimum wage to $15 an hour and shifting some of our employees into higher-skilled and higher-paying roles."

Corie Barry, CEO