Ladies and gentlemen, thank you for standing by. Welcome to Best Buy's Q4 2019 Fiscal Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions]. As a reminder, this call is being recorded for playback and will be available by approximately 1:00 P.M. Eastern Time today. [Operator Instructions]. I will now turn the conference call over to Mollie O'Brien, Vice President of Investor Relations. Mollie O'Brien: Thank you and good morning everyone. Joining me on the call today are Hubert Joly, our Chairman and CEO; and Corie Barry, our CFO. During the call today, we will be discussing both GAAP and non-GAAP financial measures. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures and an explanation of why these non-GAAP financial measures are useful, can be found in this morning's earning release, which is available on our website, investors.bestbuy.com. Some of the statements we'll make today are considered forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may address the financial conditions, business initiatives, growth plans, investments and expected performance of the company and are subject to risks and uncertainties that could cause actual results to differ materially from such forward-looking statements. Please refer to the company's current earnings release and our most recent 10-K for more information on these risks and uncertainties. The company undertakes no obligation to update or revise any forward-looking statements to reflect events or circumstances that may arise after the date of this call. As a reminder, the fourth quarter we are reporting today includes 13 weeks compared to last year's 14 week quarter. We estimate the extra week last year was approximately $760 million in revenue and approximately $0.20 of non-GAAP diluted EPS. Last year's extra week is excluded from our comparable sales calculations. I will now turn the call over to Hubert.

Good morning everyone. And thank you for joining us. I will begin today with a review of our fourth quarter and our fiscal 2019 annual performance, will provide an update on our progress as we implement our Best Buy 2020, building the New Blue strategy. And I will discuss our priorities for fiscal 2020. I will then turn the call over to Corie for additional details on our quarterly results and our financial outlook. But first, we are very proud of the financial results we've just delivered. In the fourth quarter we grew our Enterprise comparable sales by 3%, which is on top of 9% last year. We also expanded our non-GAAP operating income rate by 30 basis points and delivered non-GAAP diluted EPS of $2.72, which is up 23% compared to last year excluding the extra week on a reported basis. Including last year's extra week, our non-GAAP EPS was up 12%. On a full year basis, we grew our Enterprise comparable sales by 4.8% on top of 5.6% in fiscal 2018. This is the best two year stacked comparable sales in 14 years. We expanded our operating income rate approximately 10 basis points and grew our non-GAAP EPS by 26% on a 52 week comparable basis. I note that with the annual revenue of $42.9 billion and non-GAAP operating income of $2 billion we just delivered, we essentially met our fiscal 2021 target provided at our Investor Day in 2017, two years earlier than we said we would. From a capital allocation standpoint, we returned $2 billion to our shareholders through dividends and share repurchases. And our non-GAAP return on invested capital now stands at 25.8% indicating that our formula of investments in our future, revenue growth and cost takeout is producing very attractive returns. In addition to these strong financial results, during fiscal 2019, we also made significant progress implementing our Best Buy 2020 strategy to enrich lives through technology and further develop our competitive differentiation. Let me provide some highlights starting with our customers. Our customers are noticing the improved experience we provide them as they interact with us digitally, in stores or in their homes. For the year, our Net Promoter Score increased more than 300 basis points and our brand love with our core customer segment also rose more than 300 basis points. We saw our customers increasingly interact with us across all of our channels, driving revenue growth in our stores, online and in our in-home channel. I note in particular that 22% of the domestic business in Q4 came through the online channel. Our success with our customers is driven by the enthusiasm and the talent of our employees. Our employee engagement scores remain remarkably high, and we further reduced turnover rates in our stores to new record lows. Strategically, we've made progress in expanding what we do for our customers and how we interact with them. Here are a handful of examples. The first example is the launch of our Total Tech Support program. Having a service that provides members unlimited Geek Squad support for all their technology no matter where or when they brought it is a compelling and unique value proposition for our members. We continue to be pleased with the customer enrollment and ended the year with more than 1 million members. Another example is the expansion of our In-Home Advisor program. During fiscal 2019, we expanded the program from 300 to approximately 530 advisors and provided more than 175,000 free in-home consultations to customers across the nation. The revenue per order that we generate from these interactions continues to be much higher than in the store and online and it tends to have a higher gross profit rate as well due to the basket and higher attach rate of paid services. Both employees and customers love it, the Net Promoter Score is high and the advisor employee turnover is low. In health, we acquired a leading connected health services provider for aging consumers GreatCall and took a tangible step forward in our strategy to have seniors live longer in their homes with the help of technology. Since we acquired the company in October, the integration has been seamless and the value creation opportunities we envision have begun to materialize. During fiscal 2019, we continued to elevate the customer experience around product fulfillment, enabled by the advancement of our supply chain transformation, for small products through a combination of initiatives including expanded partnerships and automation. We continue to improve our speed of delivery to customers and expanded next day and same day delivery options. We now offer same day delivery on thousands of items in 40 metro areas and next day in 60 metro areas. And of course customers also have the option to pick up their products in our stores within one hour of placing their order. For large products like appliances and TVs we expanded our distribution center capacity and brought locations closer to customers, which is driving significant improvements in the quality of our delivery and installation service. In parallel to the customer experience work, we continued to drive efficiencies and reduced costs in order to fund investments and offset pressures. During fiscal 2019, we achieved $265 million in annualized cost reductions and efficiencies, bringing the cumulative total to $500 million since Q2 fiscal 2018. This is towards our fiscal 2021 goal of $600 million and since the launch of Renew Blue in 2012 we have now taken $1.9 billion of cost out. In addition to these accomplishments, we're very proud of our progress in advancing our corporate social responsibility and sustainability efforts. In fact, we were just named number one on Barron's annual 100 Most Sustainable Companies list. So in summary, we're very pleased with the results we are producing as we implement our Best Buy 2020 strategy and I so appreciate the hard work of our associates as well as our partners in driving these terrific results. And I want to recognize them publicly here. So as we look forward, we are excited about the opportunities ahead of us. Before I say more about these, let me say a few words about the economic environment. There has been much discussion about the economy. I would note that the latest Bloomberg composite forecast which aggregates the basket of economic forecast, calls for consumer spending to increase 2.7% in 2019, which is similar to 2018 levels and another 2.1% in 2020. So on this basis we expect to continue to operate in a positive consumer environment in 2019. Now beyond this, what drives our performance is primarily two factors, technology innovation and the relevance of our strategy and quality of our execution. In this context, we are excited by the opportunities related to technology innovation that has the potential to drive customer demand over the next several years. This kind of increases expanded penetration of existing technology, introduction of new technology in existing categories, and expansion of consumer technologies in new areas. Notably in existing categories like Home Theater, we see opportunities relating to increasing he penetration of large screen sizes 4K and OLED, and from the introduction of new technologies such as 8K. In mobile, we see new technology innovation in areas like wireless power, security and accessibility. We're also excited to watch as foldable phones emerge over the next several months and of course we'll be actively participating in the rise of 5G, which has a potential to unlock very interesting used cases over the next several years. In computing, the interest in gaming continues to accelerate and the performance necessary for this is driving innovation across both hardware and accessories. We also see significant opportunities in Smart Home technology. Notably the US retail market size of Internet of things connected hardware is forecasted to triple by 2025. This growth is buoyed by products like Smart Home connected cameras, which according to a recent report from consulting firm Activate are expected to grow from 18% penetration of US homes in 2018 to more than 50% penetration by 2022. We also believe that digital health is an exciting area with enormous opportunities from the use of technology to help customers with their health, fitness, sleep et cetera across multiple age groups from babies to seniors. As an illustration of the opportunity, the number of digital health exhibitors at the Consumer Electronics Show in January was up almost 25% versus last year. The next reason we're excited about the opportunities ahead of us is we believe the purpose driving our strategy is extremely relevant. Our purpose is to enrich lives through technology by addressing key customer needs in areas such as entertainment, productivity, communications, food, security, and health and wellness. We are encouraged by the first steps we have taken in this direction and see the potential from expanding this focus to build deeper lasting customer relationships. In parallel to this, we continue to be excited by the potential for further cost reduction opportunities that can help us fund the investments in our strategy and offset pressures in the business. Finally, I am particularly excited by the power of our incredibly talented people, who are engaged, customer-oriented and driven by our purpose and strategy. As you know, we've recently realigned senior roles, responsibilities and resources to better align with the strategy and we can already see this has a potential to accelerate our pace. Altogether, this gives us the sense that now is the time to play offense to play to win and to accelerate our transformation both from a customer and revenue standpoint and from an efficiency standpoint. So with this as a backdrop, let me talk about our priorities for fiscal 2020. At the highest level, our priorities to continue to transform the company in support of our purpose to enrich lives through technology by bringing to market solutions that solve real customer needs and by building customer relationships. As such, we will continue to expand what we do for customers. So as it relates to Total Tech Support, we plan to grow the member base and improve the experience by adding new capabilities around self-service and proactive support. We will continue to expand our health business by scaling both the GreatCall consumer devices and services and the commercial monitoring service with a focus on the senior population. As children of aging parents, many of us would appreciate the potential power of our health monitoring service that enables seniors to live longer in their homes, while reducing related healthcare costs. We're currently in pilots with a number of managed care organizations. And over time, we believe this could become a material growth opportunity for us. Now we're not the only company who is interested in the digital health space but we believe our unique focus that combines our technology solution, our talent and our ability to go to people's homes, gives us a unique advantage. In support of our strategy, we'll continue to work with our vendor partners in new and expanded ways that leverage our unique capabilities to meet the needs of our customers. For example, we’ve partnered with several vendors to create offers for our Total Tech Support members and many partners are engaged and in line to train, support and create solutions for our In-Home Advisors. In parallel, we will continue to evolve the way we interact with our customers. In the home channel, we will continue to expand our In-Home Advisor program including adding advisors and investing in tools to maximize their productivity. Our In-Home Advisor program is just one of the ways that we deliver experiences in the home today. And so we are developing a holistic home channel strategy to leverage all of the ways we currently interact with customers in the home to create meaningful relationships and further differentiate Best Buy. From a digital standpoint, we'll continue to innovate and design multi-channel experiences that serve customer needs across our website, app and other channels in ways that continue to improve the experience across online and physical shopping. We will continue with our supply chain transformation, including using technology, automation and process improvements to expand fulfillment options, increase delivery speed and improve delivery and installation. And we will continue to enhance both the proficiency of our associates and optimize the way they work in order to get stronger to drive stronger customer relationships and fulfill our customers' unique needs. In addition, as has been our brand over the last several years, we will keep driving cost reductions and efficiencies throughout the business. We've been on a run rate of more than $250 million in annualized reductions for the past two years. And we're not planning to slow down. So in conclusion, we are energized by our results, our momentum and our opportunities as we implement our Best Buy 2020 strategy. As we look at our fiscal 2020 guidance specifically we’re expecting comparable sales growth of 0.5% to 2.5%. This growth expectation is of course on top of the best two year stack in 14 years and reflects factors such as the anticipated cyclical slowdown of the console gaming category and the continued maturation of the mobile phone category. We are again planning to hold our operating rate -- operating income rate constant reflecting our focus on balancing investments in our strategy, processing the business and efficiencies. We like the continued rate of technology innovation and the capabilities technology can bring to people's lives. We like our opportunity to offer customers a more consultative approach to truly address their needs, provide them an increasing range of services and solutions, expand our relationship with them and become a bigger part of their lives. And we particularly like the opportunities we have in the connected house space following the acquisition of GreatCall. And now, I'd like to turn the call over to Corie for more details on our Q4 performance and our fiscal 2020 guidance.

Good morning, everyone. Before I talk about our fourth quarter results versus last year, I would like to talk about them versus the expectations we shared with you last quarter. On Enterprise revenue of $14.8 billion, we delivered non-GAAP diluted earnings per share of $2.72. The EPS result exceeded our expectations and our revenue performance was at the high end of our guidance range. From a product category standpoint, we saw better than expected comparable sales results in our wearable and gaming categories and lower than expected sales in mobile phones. Our operating income rate exceeded our expectations, primarily due to strong expense management. I will now talk about our fourth quarter results versus last year. As Mollie stated, this year's fourth quarter included 13 weeks, which compares to last year's 14 week quarter. We estimate the extra week last year was approximately $760 million in revenue and approximately $0.20 of non-GAAP diluted EPS. Enterprise comparable sales increased 3%. Revenue decreased 3.7% to $14.8 billion, primarily driven by the lapping of last year's extra week. Enterprise non-GAAP diluted EPS increased $0.30 or 12% to $2.72. This increase was primarily driven by: higher operating income, a $0.22 per share benefit from the net share count change and an $0.08 per share benefit driven by a lower non-GAAP effective income tax rate. These items were partially offset by non-GAAP diluted EPS of approximately $0.20 from the extra week last year. As we expected and shared with you last quarter, our comparable sales growth of 3% included a positive 50 basis point impact from the calendar shift. As a reminder, our reported comparable sales are computed on like-for-like fiscal weeks and are not shifted to more closely aligned calendar weeks following last year's 53 week year. In our Domestic segment, comparable sales increased 3% and revenue decreased 3.5% to $13.5 billion. This revenue decrease was primarily driven by lapping of last year's extra week and the loss of revenue from 257 Best Buy Mobile and 12 large format store closures in the past year. Partially offsetting these declines were the 3% comparable sales gains and revenue from GreatCall, which was acquired in our fiscal third quarter. From a merchandising perspective, the largest comparable sales growth drivers were wearables, appliances, which include both major and small appliances, Smart Home and gaming. These drivers were partially offset by declines in our mobile phone category. Domestic online revenue of $2.96 billion was 21.9% of domestic revenue compared to 20% last year. On a comparable basis, our online revenue increased 9.3% on top of 17.9% growth in the fourth quarter of last year, primarily driven by higher conversion and increased traffic. In our International segment, comparable sales increased 2.5% and revenue decreased 5.2% to $1.3 billion. The increase was primarily due to the lapping of last year's extra week, and approximately 470 basis points of negative foreign currency impact. The comparable sales increase was driven by both Canada and Mexico. Turning now to gross profit, the Enterprise gross profit rate decreased 10 basis points to 22.2%. The Domestic gross profit rate was 22.1% versus 22.3% last year. The 20 basis point decline was driven primarily by an approximate 30 basis point negative impact from a lower periodic profit sharing benefit from the company’s services plan portfolio and an approximately 30 basis point negative impact from higher supply chain costs, including both investments and higher transportation costs. The impact of the profit share was worse than expected, and the higher supply chain costs were in line with expectations. These pressures were partially offset by: One, the impact of GreatCall’s higher gross profit rate; Two, an improved gross profit rate in the services category, which included a refinement in the revenue recognition of the company's Total Tech Support offer; And three, improved products margin rate, which included the benefit of gross profit optimization initiatives. Regarding the revenue recognition refinement, we now have sufficient history of member utilization of the program to move from recognizing revenue on a straight line basis over the membership contract to recognizing revenue on a usage basis, therefore, better matching the fulfillment cost with the revenue. This refinement of revenue recognition impacted new contracts created during our fiscal fourth quarter. This accelerated both revenue and gross profit recognition compared to our previous revenue recognition timing. This revenue recognition refinement was contemplated in the guidance we provided last quarter but the actual impact was slightly more favorable than we had estimated in our initial usage analysis. The International non-GAAP gross profit rate increased 50 basis points to 22.9%, primarily due to a higher year-over-year gross profit rate in Canada, which was driven by improved gross profit rates in several product categories and increased revenue in the higher margin rate services category. These improvements were partially offset by an approximate 30 basis point negative impact from a lower periodic profit sharing benefit and gross profit rate pressure in the mobile phone category. Now turning to SG&A, Enterprise non-GAAP SG&A was $2.29 billion or 15.5% of revenue, which decreased $150 million and 40 basis points to last year as a percentage of revenue. Domestic non-GAAP SG&A was $2.08 billion, or 15.4% of revenue versus $2.22 billion or 15.8% of revenue last year. The $134 million decrease was primarily due to the lapping of last year’s extra week and cost reduction. There were a number of other largely offsetting items as lower expenses associated with incentive compensation and stronger expense management were offset by: growth investments, which include specialty labor and higher depreciation expense; GreatCall operating expenses; and higher variable costs associated with increased revenue. International non-GAAP SG&A was $207 million or 15.9% of revenue versus $223 million or 16.2% of revenue last year. The $16 million decrease was primarily due to the favorable impact of foreign exchange rates, and lapping the extra week last year, which were partially offset by higher payroll and incentive-related expenses in Canada and the impact of new stores opened in Mexico in the past year. On a non-GAAP basis, the effective tax rate decreased to 24.6% from 27% last year. The lower effective tax rate was primarily due to the reduction in the US statutory corporate tax rate as a result of tax reform, partially offset by a larger benefit from the resolution of discrete tax matters in the prior year. As a reminder, the lower statutory tax rate became effective on January 1st, and was applied to our full quarter this year compared to approximately one month in last year's comparable quarter. From a cash flow perspective, we ended the year with a 4% higher inventory balance compared to last year, whereas our accounts payable increased 8%. The lower owned inventory position was primarily due to the timing of inventory receipts over the holiday season. In fiscal 2020, we will adopt a new standard for lease accounting. We anticipate the new standard will materially increase our assets and liabilities, but we expect it will have an immaterial impact on our net earnings. As it relates to capital allocation, our approach has not changed. Our strategy is to fund operations and investments in growth, including potential acquisitions, and then to return excess free cash flow over time to shareholders through dividends and share repurchases, while maintaining investment grade credit metrics. We continue to target a non-GAAP dividend payout ratio between 35% and 45%. This morning, we announced that we increased our quarterly dividend 11% to $0.50 per share, and provided an outlook for share repurchases of $750 million to $1 billion in fiscal 2020. We also announced that the Board of Directors approved a new share repurchase authorization of $3 billion, [replacing] the existing authorization from February 2017. I would now like to talk about our full year fiscal 2020 financial guidance. Enterprise revenue in the range of $42.9 billion to $43.9 billion; Enterprise comparable sales up 0.5% to 2.5%; Enterprise non-GAAP operating income rate of approximately 4.6%, which is flat to fiscal '19’s rate; Enterprise non-GAAP diluted EPS in the range of $5.45 to $5.65; a non-GAAP effective income tax rate of approximately 24.5%; and capital expenditures in the range of $850 million to $900 million. I would like to call out a number of assumptions reflected in our annual guidance. Our investments, in particular in specialty labor, technology and increased depreciation related to strategic capital investments and ongoing pressures in the business will be partially offset by a combination of returns from new initiatives and ongoing cost reductions and efficiencies. Although there may be variations between quarters, our outlook for the full year assumes gross profit as a percent of revenue will be approximately flat to fiscal 2019 as continued investments in supply chain and higher transportation costs are offset by the higher margin rate of GreatCall. SG&A dollars are expected to grow as a percentage in the low single-digits and be approximately flat as a percentage of revenues in fiscal 2019. The increased expenses of GreatCall and continued investments in technology and wages are expected to be partially offset by lower incentive compensation expense as we reset our performance targets to align with our fiscal 2020 expectations. As it relates to US tariffs on imports of certain products from China, we told you last quarter that we estimate a $200 billion lift that went into effect in September touches only about 7%, or around $2.3 billion of our total cost of goods sold. Our fiscal 2020 outlook assumes that the tariff stay at the current rate of 10%. I would also like to talk specifically about Q1, where we are expecting the following: Enterprise revenue in the range of $9.05 billion to$9.15 billion; Enterprise comparable sales growth of flat to 1%; Non-GAAP diluted EPS of $0.83 to $0.88; a non-GAAP effective income tax rate of approximately 22.5%; and a diluted weighted average share count of approximately 272 million shares. Finally, as Hubert referenced, we have essentially met our previous revenue and operating income target for fiscal 2021, two years early. We plan to host an Investor Day during our fiscal third quarter, where we will provide an update on the progress of our strategy and share more details on our mid-range financial goals. I will now turn the call over to the operator for questions.

Thank you, ma'am. [Operator Instructions]. Our first question will come from Scott Mushkin with Wolfe Research.

So I think, first of all, great results and I think probably played better than people thought. But as we look at the outlook, one of the things that we've struggled with a lot with Best Buy is just how do we grow the business and look at the growth of the business going forward? I mean, obviously, the guidance is fairly de minimis growth on the EBIT line. How should we look at it, over a more multi-year period driving comps over a longer term? And what's that level? I mean, can we think of it as a 2% to 3% comp grow or is that still hard to do?

Thank you for the question and also the compliment on the results. The longer term outlook, if you go back to the Investor Day that we had in the fall of 2017, we put an outlook out there that said we believe strongly we have the ability to grow in that low-single-digits range with flattish operating income at least in the mid-term with that point going through fiscal 2021. We delivered a bit ahead of that the last couple years. Obviously the guide over the next year is right in line with that. And given the environment as Hubert talked about the amount of excitement we have about technology, the execution and just how strongly we feel our strategy is positioned well with our customers, we feel like that line of thinking is appropriate as we look out at least through that 2021 range. And then obviously we'll update you more as we have our Investor Day in Q3 on how we're thinking about any longer term after that. But I think you've seen our guides consistent with that point of view and we don't see anything in front of us that changes our belief in that trajectory.

Our next question comes from Peter Keith with Piper Jaffray.

Corie, I just want to dig into the margin guidance, so I can appreciate you guys want to stick to the flat EBIT margin year-on-year. However, going into this year, I was thinking you had some easier compares because the Total Tech Support launch was about 15 to 20 basis points of pressure, which was like in my clawback. So can you just walk us through that EBIT margin outlook in the face of these easy compares, what some of the offsets are?

Yes, you bet. So one of the things that we wanted to make sure we landed as well, we had hit the financial goals that we laid out when we had our Investor Day in the fall of 2017. I think all of us would say we still have room to grow in terms of our strategic goals, meaning bringing to life some of those customer solutions that Hubert talked about, and really finding ways to improve those relationships with our customers. And we started down that road with offerings like the IHA experience, TTS as an example and even just the early interactions we have and offerings we have with GreatCall. That being said, we still feel strongly we have a long way to go to make those really stickier and more repetitive relationship-based offerings with our customers. And so there are additional investments which we had always pondered since we talked with you all at Investor Day that we knew we would need to make over time. And while Total Tech Support was kind of one part of that in launching that last year, there are continued investments and things like supply chain. We specifically called out specialty labor in our stores and we also specifically called out a continued technology build that will help us enable some of the strategies and bring those to life. And so, the reason that we laid out a longer kind of mid-term view in 2017 is because we knew this would be a multi-year journey of investments and while Total Tech Support represented one type of those, there will continue to be additional investments as we go into future. Now, obviously, we're offsetting a number of those with the continued cost reduction. But we're trying to find that balance between making sure we actually -- and Hubert said it, continue to actually accelerate our investments because we like what we're seeing in a way that's going to create those differentiated customer experiences. And so you’ll see those continuing into FY '20 in a way that we think we'll develop better experiences for our customers.

In other words, Peter, this is a choice. We could decide to slow down the investments and increase the operating income rate. We believe the best way for us to create long-term value for our shareholders is to continue to play to win, invest in our future, because we think the reward, the medium-term, long-term rewards of building this unique differentiation, these relationships, these solutions, is very exciting. And so that's why we're managing the business this way.

Okay. But can't argue with the returns you're getting thus far. I may bend the rules a little bit here. I just want to stick on that Total Tech Support. The comp in the services segment, nearly 14% was as high as I can remember. I'm curious if that was due to the change in the revenue recognition policy. And just as we play that forward, should those services kind of run at a above average rate for the next couple of quarters as a result of the change?

Yes, about half of the growth that we saw in that services comp was due to the refinement in the revenue recognition policy. And you're going to continue to see that into the next couple of quarters, while we roll that out over the last few year's straight line. So that will continue to be -- but the good news is with there being half still sitting under that is a good healthy growth in that services business. Operator Thank you. Our next question comes from Dan Wewer with Raymond James.

Thanks. Just looking to see if you could comment a bit further on the changes in the Total Tech Support offer. And then also with respect to the accounting change, Corie, you talked about the impact the next few quarters, will it benefit all of 2020 EBIT rate as it did in the fourth quarter?

So I'll start with the last question. It won't be the entire year because obviously we're going to lap the change necessarily when we get to Q4, so you'll see some of it as you run the early part of the year but you'll ultimately lap the change. Your first question was to expand a little bit on the change and exactly why we refined the methodology. Basically, we have sufficient history now. We've had the program long enough. We ran full rollout last year around May. And once we have the sufficient history it was much easier for us to actually match the revenue with the actual usage, because we had enough history for us to know that customers were using it a bit more upfront than ratably over the life of the contract, which is how we were initially recognizing it. And so that means you pull a bit more of the revenue to match more precisely with the fulfillment cost early in the life of the contract versus ratably over the contract. We'll keep watching the usage and make sure we're continuing to match the revenue with the usage. Because the truth is, all the things the team is working on is to make sure people are using it more consistently over the life of the contract. And so I think you'll see us continue to tweak the offering and tweak what do those customers get in a way that will help us drive more consistent usage throughout the life of the contract, but for now we're -- really it’s just a matching principle making sure that the revenue is in line with the fulfillment cost.

If the customers are front-loading the usage of Total Tech Support, is there a risk that data renewal rate could drop more than you would expect, because they're probably not using Total Tech Support in maybe months 10, 11 and 12?

I was going to say, Dan, the renewal rates are in line with our expectations. In my prepared remarks, I did comment on the fact that we were going to continue to invest in the development of the customer experience, in order precisely to build these stickier customer relationships. So I've talked about more self service capabilities, also more proactive support. So for example, to proactively tell you that your firmware needs to be upgraded or that maybe you have opportunities to clean up your computer to get back to that speed that you had initially, or maybe advice around parental control and security, so self service proactive. And also in my prepared remarks I talked about how we are expanding the vendor partnerships in new ways, getting into more of these service areas. And so, you'll see us continue to innovate, because one of our -- precisely one of our goals is to expand these customer relationships and measures that’s stickier over time. So again, in line with expectations, but opportunity to continue to evolve our customer relationships.

Our next question comes from Anthony Chukumba with Loop Capital Markets.

So I just wanted to kind of take a step back because I was little looking through my notes. When we had this call a year ago, you're coming off of your best year in quite some time. You did that 9% comp in the fourth quarter of 2017. That was your best comp I believe in 13 years. And you got it to $4.80 to $5 a share on EPS and a zero to 2% comp for the full year. You did $5.32 in EPS and a 4.8% comp. And that was with flowing iPhone sales that was with Amazon carry more Apple products. So I'm just trying to understand like clearly there's a lot that broke right in 2018. I would just love your comments just in terms of what went right in 2018 that maybe you weren't expecting or are you just being very conservative when you guided to the $4.80 to $5 and the zero to 2% comp.

There were a couple of things that we actually talked about at the start of the year that broke rights here rising. One, we've talked about our belief that the gaming cycle might actually slow a bit heading into last year and we were very clear. That tends to be a more cyclical business after having such great switch results. What we didn't have line of visibility to was a phenomenon that would become fortnight in particular and the social gaming side of things, because that carries not only the switch as a console, but listed all those in gaming. It listed computing gaming, it listed peripherals or the headphones and the things that are used in gaming, it listed all of those. And that genuinely was something that we didn't see in front of us being quite as strong as it turned out to be for the year. And that was a material change versus our original expectations. If you look at the rest of the business and I think Hubert talked about this a little bit, when you're talking about what is it that makes us excited about where we are, I also think there was an execution element around the strategy that continued to be early on a little bit of what our initial expectations were at the start of the year. Obviously a good consumer environment health, but on the back of a good consumer environment and clear interest in technology, our execution and our ability to deliver on that more relationship-based experience in our stores, in homes, online, I think actually genuinely performed even better than necessarily going into the year and when you have a better consumer environment then necessarily you imagine -- and you put on top of that even better execution and better acceleration of the strategy. I think you also just end up accelerating the results in a way you didn't necessarily expect at the beginning of the year.

Thank you. Our next question comes from Michael Lasser with UBS.

Can you break down your outlook, your comp outlook for 2020 in terms of what you expect the consumer electronics market to grow at and what you think your share gains are going to be in the year ahead? Also, you rolled out a new leasing program, lease to own, how much have you factored into your guidance that, that will contribute in the year ahead?

So let's start with the first question around kind of what we're thinking through the industry. The last couple years, the industry depending on the quarter obviously there's ebbs and flows, but you've seen flat up slightly across the industry. And remember, this is a broader definition of the industry, not just NPD, you have to think about things like gaming and phones and appliances and the Apple products. You've definitely seen flash up a little bit. As Hubert informed in some of his opening remarks, we don't see anything in front of us as the trajectory of the industry massively changes. And so we're expecting that same kind of ranges of maybe it's flattish, maybe up a little bit or something in that realm would make sense given the guide that we're seeing. Therefore, share gains is anywhere from maintaining the share that we have today to maybe slight share gains over the year. In terms of the leasing program, we have -- we were testing an expanded leasing program in a couple of markets. We were pleased with the results that we've been seeing and therefore are now going to expand the number of stores with our leasing solution. I think what we like about it is it actually opens up the opportunity for customers who might not otherwise be able to have credit or otherwise be able to have access to the kind of products that we sell. It opens up access to that product at a whole new customer base for us. That is included in the guide that we gave you and so you can assume that we’ve factored that in. But most importantly we like that we can potentially open up the experiences that we offer to a whole customer base that might not otherwise have the chance to purchase the set of products that we sell.

If I could just sneak one last question in. We're getting the question, what was the contribution from the accounting change around Total Tech Support in the fourth quarter?

So remember, not an accounting change. It is a refinement of how we're recognizing the revenue just to be very clear. We haven't called out exactly what the amount is, but I would think about it as roughly enough to kind of offset the impact that we saw or about half the impact that we saw from our warranty program. So the downside of the warranty, about half of that was offset by the upside from the refinement of the revenue recognition on Total Tech Support.

Our next question comes from Scot Ciccarelli with RBC Capital Markets.

So can you help us understand how you're thinking about the impact of Apple's expanded distribution on a 1P basis to Amazon and Costco, obviously, they're incredibly important partner of yours. And just trying to think about the potential dilutive impact of their expanded distribution on your business?

Yes. Thank you, Scot. So we reported in Q4 comps that were at the top end of our range of 3% and that reflected or that included the impact of the expanded distribution of Apple. So we feel good about this. What I would say is that when we work with our key vendor partners, we work to make sure that the customer experience we offer is very unique and really meets the customer expectations. And frankly, in the case of Apple in particular we're very proud, the experience we provide both in our stores in our -- we have 900 Apple Stores within our stores. We have 3,000 Apple experts in our stores. We've also expanded our relationship with them around services. We probably are the largest reseller of Apple Care. And we provide Apple service in some of our stores. And frankly, as is the case with our key vendor partner, we'll continue to innovate and move the relationship forward in ways that are in line with the goals of that vendor partner and advance the customer experience. So we live in a world, where we get to compete with some of the world's foremost companies. You've named a couple and there's a few others and that makes our sport stimulating. And so these kinds of move forwards are encouragement to keep moving because some experience forward so that we offer a unique customer experience and we drive innovation and experiences for our customers.

Just to be clear it looks like mobile phones actually declined in the quarter. Is the expectation as we kind of roll through calendar '19, mobile is in kind of a perpetual decline situation or was this kind of like the initial impact and you guys expect to your share and obviously failed in mobile to continue to ramp?

So just to be clear, I’d separate the mobile discussion a little bit from the expanded distribution discussion. Mobile, what we're seeing in mobile is a different question. I think you've seen lots -- written in a lot in the public, about just in general a maturation of the mobile cycle, the replacement cycles extending for people who are buying mobile phones and general softness. We actually don't feel like this was as much a question of share loss associated with any kinds of distribution changes. This is more just a question of broadly how often are people buying what are now pretty trendy phones and replacing them. And we've taken that -- and we said it specifically in our prepared remarks, we've taken some of that expectation and pushed it forward into our guide for next year. And by the way, we've been pretty consistent on our expectations for the mobile business over the last couple of years.

Thank you. Our next question comes from Chris Horvers with JP Morgan.

I wanted to follow up on the operating margin question which I -- clearly a focal point out there. So Corie can you share what the operating margin expanded on a 52 versus 52 week basis, presumably if it was up 30 in against the 53 week or the 14 week, it would have been up something higher than that. So the question on '19 is basically so are investments accelerating because it doesn't sound like the expense opportunity is slowing or is the level of comp perhaps the difference? So if you did a 3% comp in 19, like you did in 4Q, would you actually see operating margin expansion?

So for the year, if I were to adjust, FY19 versus FY18 on a 52 to 52 week basis, we have 10 basis points of operating income rate expansion. If you remember at the beginning year, we had guided flat on a 52 week basis, which would have been the 4.5%. We had 10 basis points of operating income rate expansion. And that was on a pretty significantly higher top-line than we expected, obviously, almost the 5% comp on the top-line. And so I think as you look into next year, obviously we gave you the range and we believe that will lead to a flattish operating income rate. I wouldn't say the investments have accelerated, I think it goes back to the original conversation we were having, which is we continue to make targeted investments in the places that we told you in the fall of '17 that will help us accelerate our progress on our initiatives. They are different really in pace than we had expected at the beginning. And we feel pretty comfortable that we actually like the pacing in they are in line with what we had thought at the time that we gave the original guidance. And so to your question, yes, if you massively outperform the top-line, obviously we may come back to you with a different economic equation. But from what we see in front of us, I feel pretty comfortable about what we're showing. It takes into account both the cost reductions we see in front of us and the investment profile.

Understood. And then -- and as a follow up, there's a lot of noise out there around tax refunds. Can you remind us a few years ago, when they were delayed, did that actually impact your business and is there anything that you're seeing in the business now with tax refund dollars being lower year-over-year such that, are you expecting some catch-up in the latter part of the quarter?

So it was two years ago we actually specifically commented, as to exact time, I remember the call distinctly, on there being a slowdown in the quantity of tax returns. In that year what we saw was actually most of that did come back to us and most of it back in Q1 as the quantity of tax returns evened out throughout the quarter. We're feeling a little bit of softness right now due to what has very clearly publicly been both a quantity of tax returns being down but also the amount for return right now is down. And what we're keeping an eye on is not as much even just the quantity question but also the amount for return and how that ultimately will impact our business over the quarter. The good news is at the end of the day, people will see reductions in their tax rates meaning their take home pay throughout the year no matter what the amount of the return is in and of itself. So it kind of becomes a timing question throughout the year. But we're definitely watching and have incorporated some of those thoughts into the Q1 guide.

Our next question comes from Curtis Nagle with Bank of America Merrill Lynch.

So just want to focus a little bit more on the lease to own program, I guess how much is it is in the guide? And then B, just I guess more of a theoretical question. Why did you choose to roll it out, I know you guys said that it's helping. But -- and I know in terms of credit risk you're probably not going to bear any, but inherently it is a lower quality business and process is arguably less sustainable given that these are customers who typically can’t qualify credit or typically lower income. So I guess do you see any risk to that?

So first of all, obviously, we're not going to comment on the exact amount that's included in the guide. But we've included some amounts in the guide. We specifically did test this in a couple of markets. And I think what's important here is that this genuinely is a whole new tranche of customers that would not be able to purchase products with us. The agreements that we have, we don't bear the risk over the longer term of the agreement. And so it is -- I think it makes a ton of sense for us. That being said, I think it makes even more sense for the customers. At the end of the day, what we want to do is be able to serve the widest lots of customers we can and give them access to the type of products that we sell. And these are customers who likely would not qualify for the credit offering that we have. And therefore this gives them an option to be able to actually qualify for some type of agreement with Best Buy and then be able to pay that off over time. And so I think we feel pretty passionately, so there is actually opens the doors to a whole new -- I mean think about it, sometimes this isn't just people who have bad credit, this is people who in some cases just have no credit. And this is the start for them to be able to build a credit portfolio and actually will lead to a much more robust credit portfolio over time. And history has shown up very, very, very few to the less than 1% range of these customers go delinquent on their agreements. And so this is actually a very nice offering and in fact I think helps a lot the population create credit when they might not otherwise have some.

So this is the customer acquisition play with catching people early on in their credit history and with a view to build relationships over time. So this is actually consistent with our overall strategy of helping customers, we are going to help more customers and allow them to neutralize with technology with a view of a relationship over time. This is not a deviation from the strategy. So we're excited about it, it makes sense from a customer standpoint and obviously from a financial standpoint as well.

And just really quick on the buyback, it looks like guidance is lower than what you did for this year, is that just some conservatism? It does look like your cash flow probably would support more. So I'm just curious how to think about that?

Obviously behind the scenes we're always taking a look at the cash flow making sure we feel like we have a minimum level of cash that makes sense and would support us through a number of different scenarios. We clearly spent almost $1 billion last year on our GreatCall acquisition and so very in line with our capital allocation strategy. We've always said, we're first going to invest in the business either to fund operations or through acquisition. Second, premium dividend payer. And then third with that access and by access we mean above and beyond whatever that minimum balance is we feel we need, we will then return that to shareholders and so that's in essence not that we did this year and we'll keep revisiting that every single year depending on the cash flow that we generate, that this seem like the right amount given what has historically been our capital positioning.

Thank you. We have time for one final question. And last question comes from Matt McClintock with Barclays.

I was wondering Hubert two questions real quick. The first one is just you talk about the customer relationship extensively on this call and creating that relationship with In-Home Advisors. And I was wondering now that the program has been out for well over a year, what efforts have you made in terms of monetizing the tale of that relationship throughout the year? Have you had some success there?

Yes, I think we're still at the beginning of our journey to build ongoing customer relationships. The -- I think In-Home Advisor provides us opportunity, I think we're still learning, kind of setting up scale, it’s interesting as a retailer, certainly, we've been -- and we’ve said this before we've been focused on transactions and selling products. So moving towards selling solutions and building relationships. This journey is at the beginning and we're learning, I think we're seeing, we're very excited by the results. But building that's institutional capability is something that will take time. As an illustration that involves modifying or adding a new focus on new key performance indicators. As a retailer, you would focus on transactions, growth rates, basket and so forth. As a customer relationship focused retailer, you're going to be focused in a local market, that how many households are there. How many of them are Best Buy customers with whom we have a relationship, what’s my share of wallet. Just by saying these things, I think you can feel the magnitude of the change we're operating and that relates to the investments we're making, the training, the tools and so forth. And which is at the beginning of that journey which personally for me is a side of excitement because you can see the upside and we have captured any meaningful part of the upside from there. So very early on in the innings of that journey.

Thanks for that. And then if I could squeeze one more in, just in terms of mobile, you brought up 5G and you brought up the foldable phone. Could you talk about how that could revitalize the category overall and potentially be a game changer, meaning it seems like with the ASPs of the foldable phone, you might be looking at something similar to historically how tablets impacted your business overall?

And with us on the call we have Mike Mohan our Chief Operating Officer for the US business. And Mike is going to take that question and then we'll just wrap.

Thanks for the question, Matt. It's an exciting time to see what's happening in technology. Clearly, we have talked about the increasing price of all mobile devices. And so all of this new technology is going to have a fairly limited appeal from an acquisition standpoint, but an extremely high level of interest from consumer, what it can do for them, and how does it solve used cases. So what we're most excited about is showcasing the technology, inviting customers into our stores, onto our site, and even having some of the products in our In-Home Advisor when you go visit people so we can show people what we can do. And I think it positions us in a very unique place to show how technology will continue help enrich people's lives and I think that's probably the best way to put our excitement in this area. We will always lean forward on something that will help customers solve a problem and I think they would expect us to take a leadership position here.

I just want to say thank you Mike. And in closing, I want to again show my hats-off appreciation for the work and talent and passion of all of our associates across all functions in the business. You guys are amazing. And I want to thank you for joining our call and your interest in Best Buy. And we look forward to continue to update you as we continue to move forward. So you have a great day. Thank you.

Thank you, ladies and gentlemen. This concludes today's teleconference. You may now disconnect.