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Segment Performance
Domestic
The following table presents selected financial data for the Domestic segment for each of the past three
fiscal years ($ in millions):

Segment Performance Summary (unaudited)	2003	As-Adjusted 2002⁽¹⁾	2002	2001⁽²⁾

Revenue	$19,303	$17,115	$17,115	$15,189
Comparable stores sales % change⁽³⁾	2.4%	1.9%	1.9%	4.9%
Gross profit as a % of revenue	25.0%	24.9%	21.2%	19.8%
SG&A as a % of revenue	19.8%	19.8%	16.0%	15.8%
Operating income	$ 1,002	$ 876	$ 886	$ 611
Operating income as a % of revenue	5.2%	5.1%	5.2%	4.0%
Note: All periods presented reflect the classification of Musicland’s financial results as discontinued operations. ⁽¹⁾ As-adjusted information conforms the accounting for vendor allowances to the fiscal 2003 method. ⁽²⁾ Includes results of operations of Magnolia Hi-Fi since its acquisition in the fourth quarter of fiscal 2001. ⁽³⁾ Includes revenue at stores and Internet sites operating for at least 14 full months, as well as remodeled and expanded locations. Relocated stores are excluded from the comparable store sales calculation until at least 14 full months after reopening. Acquired stores are included in the comparable store sales calculation beginning with the first full quarter following the first anniversary of the date of acquisition. The calculation of the comparable store sales change excludes Musicland revenue, which is included in discontinued operations.

Domestic operating income increased 14% to $1.0 billion in fiscal 2003, compared with $876 million in fiscal 2002 on an as-adjusted basis. The increase in operating income was primarily due to the addition of 67 new U.S. Best Buy stores in the past 12 months, a full year of revenue from new stores opened in fiscal 2002 and a slight improvement in the gross profit rate.

Domestic revenue increased to $19.3 billion in fiscal 2003, a 13% increase over fiscal 2002 revenue of $17.1 billion. Approximately four-fifths of the revenue increase was due to new U.S. Best Buy stores opened in the past two fiscal years. The remainder of the revenue increase was attributable to the 2.4% comparable store sales gain for the fiscal year. The comparable store sales gain was primarily the result of revenue gains in the entertainment software and consumer electronics product categories, partially offset by revenue declines in the home office and appliances categories. Comparable store sales gains in the
entertainment software category were driven by double-digit comparable store sales increases in video gaming hardware and software and DVD movies. The growth in the entertainment software category was partially offset by weak sales of prerecorded music resulting from the continuing trend of downloading music via Internet sites and increasing consumer awareness of CD recording technology. The consumer electronics category experienced a mid-single-digit comparable store sales increase, fueled by increased digital product revenue. Digital product revenue comprised 22% of the revenue mix in fiscal 2003, compared with 17% the prior fiscal year. Within the consumer electronics category, digital televisions and digital cameras were the primary products driving the comparable store sales gain. Declines in revenue from analog televisions and VCR players, products being replaced by new technology, partially offset gains generated in other consumer electronics product groups. Comparable store sales in the home office category declined slightly, primarily due to continued weakness in sales of desktop computers and reduced prices for computer peripherals. The decline was partially offset by increased revenue from notebook computers and MP3 players. Appliance revenue experienced a high-single-digit comparable store sales decline due to reduced consumer demand and increased competition. >>