Ladies and gentlemen, thank you for standing by. Welcome to Best Buy's Fourth Quarter Fiscal Year 2021 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 11:00 a.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 Corie Barry, our CEO; Matt Bilunas, our CFO; and Mike Mohan, our President and COO. 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 earnings release, which is available on our website investors.bestbuy.com. Some of the statements we will make today are considered forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may address the financial condition, 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 and subsequent 10-Q 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. I will now turn the call over to Corie.

Good morning, everyone, and thank you for joining us. During the fourth quarter, our teams across the company delivered an exceptional customer experience in a safe environment. They showed amazing flexibility and execution, managing extraordinary volume in a dynamic situation, and they strive every day to create safe shopping experience often in the face of pandemic fatigue. As a result, today we’re reporting strong Q4 financial results which include comparable sales growth of 12.6% and non-GAAP earnings per share growth of 20%. We continue to leverage our unique capabilities, including our supply chain expertise, flexible store operating model and ability to shift quickly to digital to meet the ongoing elevated demand for stay-at-home products and services. Online sales grew almost 90% to a record $6.7 billion and made up 43% of our total domestic sales. Our stores played a pivotal role in the fulfillment of these sales, as almost two thirds of our online revenue was either picked up in-store or curbside, shipped from a store or delivered by a store employee. The percent of online sales picked up by customers at our stores was 48%, representing a 90% increase in volume. Ship-to-home volume was up 38% and even with that increase in volume, we were able to accelerate the delivery speed to our customers on a year-over-year basis by strategically using our partners, our stores and our employee delivery. For additional context, same-day shipping volume was up 376% and our employees delivered more than 1 million units. From a product category perspective, the biggest contributors to the strong comp sales growth in the quarter were computing, appliances, gaming, virtual reality and home theatre. As you recall, this year we started holiday promotions in October, which is in our third quarter. We started these events early and spread them over the course of several weeks to help avoid overly crowded days in our stores in order to create a safer shopping experience. These efforts to manage the traffic flow into our stores proved effective and evened out some of the peaks and valleys through the holiday season. As planned, it also resulted in some holiday sales being pulled into Q3 after reaching 33% comp growth in October, our growth rate moderated as we lapped last year's November and December holiday sales before accelerating again in January due to the ongoing elevated stay-at-home demand boosted by government stimulus actions. That sales growth momentum we saw in January has largely continued into February. As a result of both the successful early holiday sales and the product availability issue the industry has been seeing all year, we continue to experience product availability constraints during the fourth quarter, which we believe moderated our holiday sales, particularly in large appliances, computing and televisions. In addition, demand for the new gaming consoles far outstripped supply across the industry as is well documented. Our teams work closely and effectively with our vendors to bring in as much inventory as possible, and inventory positions improved through the quarter. As I step back and reflect upon the whole year, it was truly a year like no other. In addition to an international pandemic, there was social unrest across the nation and numerous natural disasters. I am proud of and inspired by the way our teams have navigated the challenges and what they have accomplished. We saw remarkable customer demand and delivered outstanding execution that led to a very strong financial result. For the year, we delivered comparable sales growth of 9.7% and non-GAAP earnings per share growth of 30%. We drove record free cash flow of $4.2 billion and ended the year with $5.5 billion in cash and short-term investments. Since the beginning of the pandemic, we have responded to the impacts of it with a focus on safety and helping customers get the products they need to work, learn, cook, entertain and communicate at home. We provided customers with multiple options for how, when and where they shopped with us to ensure we met their definition of safe retailing, and customers noticed. The percent of customers surveyed who said we made them feel safe while they were in our stores and while we were in their homes was consistently above 97% throughout the year. To best serve our customers during the pandemic, we had to be innovative and flexible. Early in the year, we quickly rolled out enhanced curbside pickup across our stores to provide our customers convenience when we made the difficult decision to close our stores in March. In May, we developed an in-store appointment model that provided our customers with an option to shop in our stores as we prepared to open stores back up to customer shopping. We developed solutions like virtual consultations with advisors and video chats with our store associates. In addition, we made significant improvements to the functionality and customer experience of our app to provide access to shopping support and fulfillment. This drove not only new users of the app, but also increased levels of customer engagement with the app. In Q4, first time launches of the app were up almost 80% and the average number of app visits per unique user were up 34%. During the year, we also increased our investment in support of our employees. Early on in the pandemic, we continue to pay employees who weren't working for a full month after we closed our stores to customer shopping. We paid hourly appreciation pay for those who were working on the front lines, and established multiple hardship funds for anyone impacted physically, emotionally or financially by COVID. We provided enhanced benefits that included 100% coverage of COVID related health care expenses, expanded caregiver leaves, additional support for backup childcare, tutoring, reimbursement, and access to physical and mental health virtual visits. Including our estimates for fiscal '22, we will have invested more than $75 million on enhancements to our structural employee benefits over a 3-year period. In addition to enhanced benefits, starting in August, we raised the starting minimum wage to $15 per hour for all our employees, which brought our average hourly wage for hourly employees up to $17.67. To show our appreciation for their hard work over the past year and in recognition of their ongoing efforts in the face of pandemic fatigue, we are paying employees an additional cash gratitude bonus. In the next few weeks, all hourly U.S employees will receive $500 as full time and $200 as part time or occasional seasonal. In addition, to help keep employees and customers safe, we are encouraging all employees to get COVID vaccinations as they are available by providing them with paid time off when they receive the vaccine and providing them absence time to be used in the event they develop side effects that weren't there needing to stay home and rest after receiving the vaccination. In all, the COVID related decisions we have made since the beginning of the pandemic, support our employees totaled more than $350 million. This includes paying employees while they were working during store closures, appreciation pay, guaranteed pay, bonuses, vaccination support and hardship funds. We've also deepened our commitment to community. Last year we made a $40 million donation to the Best Buy foundation to accelerate the progress toward our goal to reach 100 Teen Tech Centers across the U.S. And we committed to making systemic permanent changes that address social injustices to improve our company and our communities. We also signed the climate pledge committing to be carbon neutral across our operations by 2040, a decade earlier than our previous goal of 2050. We were honored to be recognized for our efforts by Barron's earlier this month, when we were named to the top of their most sustainable public companies list. The list rated the 1000 largest public companies on five key stakeholder categories, shareholders, employees, customers, community and planet. Notably, Best Buy was also called out as the company with the leading COVID response, citing our efforts to maintain employee and customer safety, help employees experiencing hardship, and continue to meet the technology needs of customers. This is the fourth time we have been in the top five and the second time we have been in the number one position. As we think about our strategy moving forward, many of the things we discussed at our 2019 investor update came to life in a very accelerated way last year. It is important to reiterate the following three concepts we believe to be permanent and structural implications of the pandemic that are shaping our strategic priorities. One, 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. It's too early to know exactly how much of our sales and customer shopping activity will be via digital channels over time. But as I mentioned earlier, online sales were up 43% of our domestic -- online sales worth 43% of our domestic sales in fiscal '21. And we are planning for the mix to be approximately 40% in fiscal '22. That compares to 19% in fiscal '20 and only 5% just 10 years ago. Two, our workforce will need to evolve in a way that meets the needs of customers while providing more flexible opportunities for our employees. And three, technology is playing an even more crucial role in people's lives. And as a result, our purpose to enrich lives through technology has never been more important. We play a vital role in bringing technology to life for both our customers and our vendor partners. These concepts are extensive and interdependent, and we are as quickly as possible, both implementing change today and assessing future implications across our entire business, including how we evolve our stores and labor model, and how we spend our investment dollars. Our research indicates our customers look to Best Buy to serve four shopping needs; inspiration, research, convenience, and support. And customers expect to be able to seamlessly interact with physical and digital channels. We must be ready to serve all of these needs at all times in all channels. We are building all of our experiences around meeting these needs as we move from being a big box retailer with a strong omni-channel presence to an omni-channel retailer with a large store footprint for support and fulfillment. Fundamentally, when you're looking for help and want to be inspired, the best experience will always be in our stores talking to one of our amazing employees. The proximity to a physical store still matters to many customers. And our stores serve an important role in fulfillment and support and also provide awareness and convenience that are critical to retaining and growing sales. But we also know that customer shopping behaviors are changing, and we need to evolve with them. In the fourth quarter, the pandemic drove a roughly 15% reduction in traffic to our stores, including both in-store shoppers and customers picking up online orders via in-store or curbside. And while some traffic will likely shift back to our store channel in fiscal '22, like many retailers, we believe much of what we saw last year will be permanent. Our employees and the stores will always be central to our strategy. We are simply looking at how we can best deploy our team and our physical assets to meet customer expectations and needs. As we discussed last quarter, we are taking the opportunity to test and pilot a range of models and initiatives in order to chart the best path forward. We must balance urgency for teams with the need to learn and understand how customer shopping behavior is changing. We are already gathering learnings and iterating on our initiatives. An example is our ship-from-store hub pilot that we've talked about for the past few quarters. During Q4, we used 340 stores or roughly 35% of our store locations to handle about 70% of our total ship-from-store units. We believe that we can achieve similar results consolidating volume, using a smaller group of stores as hubs over time. In addition, in a subset of these stores, we plan to reduce the sales floor square footage and install warehouse grade packaging station equipment and supplies. As a result, we expect to drive both efficiency and effectiveness. We also continue to pilot reduce selling square footage and alternative layouts in a number of stores in the Minneapolis market. As you would expect, pandemic or not, we're constantly looking at our store network, responding to customer and demographic shifts just as any retailer does. We will continue our normal review process, which involves putting stores through rigorous evaluations as their leases come up for renewal. As we look to the near-term, there will be higher thresholds on renewing leases as we evaluate the role each store plays in its market, the investments required to meet our customer needs, and the expected return based on a new retail landscape. For context, we have approximately 450 leases coming up for renewal in the next 3 years, or an average of 150 each year. As part of the review process, we have closed approximately 20 large format locations each of the past 2 years, and expect to close a higher number this year. We have also been reducing the length of our average lease term, which will continue to provide us flexibility. In addition to our physical stores, our operating model needs to evolve to meet our customers changing shopping behaviors that have been accelerated by the pandemic. The sudden and lasting shift customers have made to shopping more regularly and seamlessly across all of our channels, has forced us to look at how we get our work done. Our response to the pandemic has shown our ability to be successful when broadening the scope of responsibility of our associates, and has highlighted the importance of ongoing flexibility and adaptability. This too was a hypothesis we shared at our 2019 investor update and was massively accelerated by customer shopping behavior changes. Since the pandemic began, our overall headcount has been going through a transformation. As a reminder, we made the difficult decision to furlough approximately 51,000 retail employees due to store closures last April. By August, we have brought back about two thirds of them. As we approached the fourth quarter any remaining employees that had been on furlough were asked to return to work as seasonal employees for the holidays. As employees who were on furlough decided not to come back and other employees left as a result of attrition, we have not been backfilling positions as we consider how to adjust our operations to better meet our customers' needs going forward. As a result, we entered fiscal '21 with 123,000 employees across the entire organization and we are leaving the year with about 102,000 team members, a decline of roughly 21,000 or 17%. Even though headcount across the enterprise has been declining primarily due to this attrition, we still have had to make difficult decisions. Earlier this month, one of those decisions was to adjust the mix of full time and part time employees at each of our store locations. At an aggregate level, this was due to having too many full time and not enough part time employees. As part of the process, part time roles were offered to many of the displaced full time employees who were interested and qualified. The end result was that we laid off and provided severance to approximately 5,000 employees, the majority of which were full time. At the same time, we are adding approximately 2,000 additional part time positions. Decisions like these are never easy or taken lightly, but they position us to be more responsive and flexible as we continue to refine our operating model going forward in response to the incredibly rapid change and how customers want to shop with us. It is important to add that we are intent on rescaling and retraining employees wherever possible, so we can retain our people and employees can flexibly work across all our channels. Our vision of a flexible workforce is about more than having our associates gain the knowledge and skills to be effective in more areas within the traditional store setting. It expands to include the type of interactions that have become even more relevant in a digital shopping environment. Over the past year, thousands of employees who possess unique skills were leveraged across multiple areas of our business, like virtual sales, chat, phone and remote support. In addition, we are investing in people and hiring in areas like supply chain, small parcel delivery, customer care and technology in support of our long-term strategy. As the last year has demonstrated, technology is playing an even more crucial role in people's lives. We are excited about the technology trends and innovation we see over the next several years. As expected, there's been immense innovation in the consumer health category. The fitness industry has pivoted quickly, and the category is exploding as consumers want to stay fit at home and outfit home gyms. Beyond the connected equipment, customers now have the ability to integrate data for different types of activities like rowing, biking, and running into any number of wearable devices to measure their overall fitness and progress more seamlessly. There is also innovation around more chronic conditions such as diabetes and heart disease, with wearables that monitor insulin levels and heart rates. Hearing aids is another category going through innovation and we are excited to help our customers with hearing needs both online and in our stores. The proliferation of health related devices has become so great. We created a health and wellness digital shopping experience accessible directly from the homepage of our website. Of course, there's an innovation curve in products that help people work-at-home as well. There's an influx of products around all aspects, from high tech chairs to monitors to standing desks. These are products that were not even on vendor roadmaps before the pandemic and now truly complete the working at home experience. Access to 5G is still growing as networks are rolling out across cities. As we move into next year and the year after, it will be more mainstream and accessible for all of us. We are excited about the introduction of new products over time that will leverage the speed and capabilities of 5G beyond the mobile phone. Of course our customers expect Best Buy to be there to help inspire and support all their technology. Our consultation program continues to be an important differentiator and advisors are inspiring technology solutions by a customer consultations happening in homes, digitally in stores and via chat and phone. We are also leveraging our consultation program with our partners. For example, customers can schedule an appointment with one of our advisors while shopping on samsung.com. On the support side, our Total Tech Support program continues to receive very strong customer rating, and is a unique program that we believe only we can offer. Membership growth recovered after we opened our stores more broadly. We continue to see significant opportunity over time to evolve all of our many customer memberships, which also includes our millions of My Best Buy customers. We purposefully press pause on this initiative at the start of the pandemic and are planning to roll out a pilot in the next few months that will leverage our learnings from the material evolution of customer shopping behavior over the past year. I'd also like to update you on our health business more broadly. The pandemic has only served to underscore our purpose and strategy. The adoption of virtual care and telehealth by patients and physicians have been greatly accelerated by COVID-19 and is expected to continue to grow. We see significant opportunity over the long-term to make the experience much better for both patients and physicians by providing an integrated seamless technology solution that is easy to use. To that end, our Best Buy health strategy focuses on three areas that start with our strength in retail, and build to connecting patients and physicians. The first focus area is the consumer health category I spoke about a little earlier. These products are for customers who want to be healthier, sleep better, or need to monitor a chronic condition like diabetes or heart disease for example. The second area is active ageing, which includes device based emergency response and other services for generation A, who wish to continue to live independently in their homes. Active ageing builds on the GreatCall CST and Biosensics acquisitions. The third focus area is virtual care, and includes digital health caring center services that connect patients and physicians to enable virtual care and remote patient monitoring. We provide personal emergency response, remote patient monitoring, and care counseling services to payers serving Medicare Advantage and Medicaid populations. And we will expand these services to help people monitor their chronic disease and connect to their physician. Our differentiated approach combines Best Buy's in-home and care counseling services with digital health. By digital health we mean curated monitoring devices, packaged with the consumer in mind with a platform to distribute, activate and test the devices to ensure the consumer can use them and connect to their physician. In fiscal '22, we plan to expand the consumer health product assortment and additional devices and services to our active ageing business and add new remote patient monitoring offerings and a new technology platform in virtual care. In order to do this, we plan to invest in people, product development and the ongoing development of our health technology platform and our data analytics and intelligence engines. In addition to the investments in our health strategy, our investments in technology and automation will be important aspects in defining how our model continues to evolve in the future. As has been our practice for the past 8 years, we have continued our commitment to leverage cost reductions and efficiencies to help offset investments and pressures. Our current target set in 2019 is to achieve an additional $1 billion in annualized cost reductions and efficiencies by the end of fiscal '25. We achieved approximately $340 million toward our new goal during fiscal '21, taking our total to $500 million towards this goal. In summary, during fiscal '21, we managed through the challenging environment in a way that allowed us to accelerate many aspects of our strategy to deliver on our purpose, and thrive in a new and forever changed environment. Our teams collectively changed the way we do business at a pace we never imagined. And I must reiterate how proud I am of their perseverance and commitment. As a result, we advanced our 5-year plan both strategically and financially much further than we expected. While we are ahead of plan in several strategic areas, the disruption of the pandemic has also impacted other strategic initiatives. For example, while our health business has proven to be even more strategically relevant to our mission, the pandemic certainly disrupted the progress and the path forward will take time. We also still have meaningful opportunity to evolve our membership and services models to drive loyalty. In addition, we will need to invest in our future as we proactively evolve all the channels of our business to deliver amazing customer experiences in a world where half of the revenue might be initiated online. All that being said, we see a path that leads to margin expansion beyond what we articulated at our last investor update. In fiscal '22, we expect our operating income rate to be lower than fiscal '21s 5.8% operating income rate as we continue to navigate and cycle impacts of the pandemic, while investing in our strategy as Matt will discuss. We are still in the midst of the pandemic, so we are not updating with a specific metric, but we see long-term non-GAAP operating income rate that is beyond the 5% fiscal '25 target we introduced in September 2019. Now, I would like to turn the call over to Matt for details on our results and insights on our outlook for fiscal '22.

Good morning. Our financial results for the year far surpassed what we thought was possible entering the year. We are leaving fiscal '21 with an even healthier balance sheet and we -- than when we started the year and saw our non-GAAP operating income rate expand 90 basis points versus the prior year. The rate expansion was possible due to both our ability to capitalize on the elevated demand for technology and by reducing spend early in the year in certain discretionary areas beyond the unknown -- based on the unknown situation we were facing at the beginning of the pandemic. We also accelerated strategies that allowed us to begin adjusting our cost structure to what we believe will be a permanent shift in how customers want to shop. Despite the difficult decisions we made, throughout the year we remain committed on investing in areas we felt were most crucial to delivering our future growth plans. Let me now share more details specific to our fourth quarter. On enterprise revenue of $16.9 billion, we delivered non-GAAP diluted earnings per share of $3.48, an increase of 20% versus last year. Our non-GAAP operating income rate of 6.9% increased 40 basis points. This rate expansion was driven by approximately 90 basis points of leverage from the higher sales volume on our SG&A, which was partially offset by 60 basis point decline in our gross profit rate. In addition, a lower effective tax rates had a $0.08 favorable year-over-year impact on our non-GAAP diluted EPS. In our domestic segment, revenue for the quarter increased 11% to $15.4 billion, an all time high for revenue in a single quarter. Comparable sales growth of 12% was partially offset by the loss of revenue from stores that were permanently closed in the past year. From a merchandising perspective, we had broad based strength across most of our categories, with the largest drivers of comparable growth coming from computing, appliances, gaming, virtual reality and home theatre. This growth was partially offset by declines in headphones and mobile phones. Turning now to gross profit. The domestic non-GAAP gross profit rate declined to 50 basis points to 20.7%, primarily driven by supply chain costs associated with a higher mix of online revenue. In the fourth quarter, our online sales were 43% of our overall domestic sales in the quarter compared to 25% last year. Although it was a smaller impact than the supply chain costs, our category mix was also a pressure this quarter. These items were partially offset by a promotional environment that was more favorable compared to last year. Our international non-GAAP gross profit rate decreased 180 basis points to 20.8%, primarily due to increased supply chain costs from a higher mix of online sales, and a lower sales mix from the higher margin services category. Moving next to SG&A. Domestic non-GAAP SG&A increased 5% compared to last year, and decreased 90 basis points as a percentage of revenue. As expected, the largest drivers of the expense increase versus last year were: one, higher incentive compensation for corporate and field employees of approximately $55 million; two, increased variable costs associated with higher sales volume, which included items such as credit card processing fees; and three, technology investments which also included support of our health initiatives. These increased expenses were partially offset by lower store payroll expense. Let me share some additional context on the increased expense from our technology investments. Technology has, and increasingly will be the foundation of how we will operate and how we accelerate our strategy. This includes continued technology investments and capabilities to support our health initiatives, increasing and improving our digital interactions with customers, simplifying tasks in our stores, and building upon our analytics to support decisions we make on a daily basis. We are also modernizing our systems and tools as well as utilizing more cloud based solutions. For example, we are partnering with Microsoft to leverage its cloud to help power our healthcare offerings. In addition, we are transforming the structure of our technology teams by bringing more headcount in-house versus using contract workers. Let me next provide more context on $129 million in restructuring charges from this quarter, which also include a $13 million benefit within cost of sales. About $88 million of the charges related to changes in our domestic segment to realign our organizational structure with our strategic priorities. The remaining $41 million is primarily related to our previously announced plans to exit operations in Mexico. We don't anticipate any additional material charges in Mexico in future quarters, and all of our store locations in Mexico will be closed by the end of Q1. Moving to the balance sheet. We ended the quarter with $5.5 billion in cash and short-term investments. At the end of Q4, our inventory balance was approximately 8% higher than last year's comparable period to support the current demand for technology. Approximately half of the year-over-year increase is related to inventory still in transit. Although trends have improved from earlier in the year, we are still experiencing constraints driven by the high demand in several or key categories. During fiscal '21, we returned $880 million to shareholders through $568 million in dividends and $312 million in share repurchases. We resumed share repurchases during the fourth quarter after suspending activity last March. This morning, we announced a 27% increase in our quarterly dividends to $0.70 per share. We also announced our plans to spend at least $2 billion on share repurchases in fiscal '22. In addition, our Board of Directors approved a new $5 billion share repurchase authorization, replacing the existing authorization dated February 2019, which had a $1.7 billion in repurchases remaining at the end of fiscal '21. As we look to our fiscal '22, we are not providing our traditional guidance, but I would like to share our planning assumptions as we enter the year. As we start fiscal '22, the demand for technology remains at elevated levels and the sales growth momentum we saw in January has continued through the first three weeks of February. The uncertainty around the administration of the COVID vaccine and the subsequent impact of customer demand and shopping patterns makes it difficult to predict how sustainable these trends will be. Other factors to consider include government stimulus actions, and the risk of continued higher unemployment. With that being said, we estimate fiscal '22 total comparable sales growth in the range of down 2% to up 1%. This range reflects a scenario in which customers resume or accelerate spend in areas that were slowed during the pandemic, such as travel and dining out in the back half of this year. Overall, we expect growth to be positive in the first half of the year, and then negative in the back half as we lap strong comp growth in Q3 and Q4 of fiscal '21. We will update our expectations during the year if needed, and there's more clarity to the various factors driving our outlook. Regardless, we anticipate revenue for fiscal '22 will be higher than what we would have expected to be at this time last year. From a gross profit rate perspective, we are planning for a non-GAAP rate that is slightly below our fiscal '21 rate. We anticipate more promotional pressure than we experienced this past year as inventory becomes more available and competition likely increases. As Corie mentioned, we are planning for online sales to represent approximately 40% of our domestic sales in fiscal '22, which is only slightly lower than our x in fiscal '21. As a result, supply chain related costs are not expected to have a material impact on our rate compared to the prior year. From an SG&A standpoint, we are expecting dollars to increase as a percentage in the low single-digit range. There are a number of factors driving the expected increase. First, we expect our SG&A increase -- expense to increase approximately $100 million on a year-over-year basis as we lap COVID related decisions we made last year to preserve liquidity. This includes returning to more normalized spend on items such as 401(k) company match, advertising spend, store overhead items such as maintenance. This $100 million increase includes the benefit of lapping the $40 million donation to the Best Buy foundation we made in Q3 of fiscal '21. Second, we plan to increase our investments in depreciation -- in depreciation in support of technology and our health initiatives by approximately $150 million compared to fiscal '21. Third, we expect store payroll costs to be lower compared to fiscal '21 even after including the impact of lapping $81 million of employee retention credits from the CARES Act we received in the first half of fiscal '21. There are clearly other puts and takes that we will manage through, some that will be more impactful in one quarter versus the next. But the previous items are the key drivers of how we are viewing the full year. Based on the drivers I just outlined, our expectation is for our operating income rate to decline on a year-over-year basis, which is primarily a result of our increased investments in technology and in support of our health initiatives, as well as the impact of lapping the temporary actions from fiscal '21 I just shared. In relation to capital expenditures, we expect to spend approximately $750 million to $850 million during fiscal '22 compared to $713 million in fiscal '21. Now I will provide some color on Q1. We expect comparable sales to be approximately 20%. As a reminder, in Q1 of last year, we closed all of our stores to customer shopping and move to curbside service only for the last 7 weeks of the quarter. We anticipate our gross profit rate will be slightly lower than last year due to more promotional environment and increased delivery expense. As a reminder, we suspended in-home services for about 5 weeks during last year's Q1. We expect SG&A dollar -- dollars to increase by approximately 10%. This increase is primarily related to incentive compensation, as we suspended all expense during Q1 last year for corporate and field employees, as well as the gratitude and vaccination related bonuses that Corie discussed. These items combined are expected to result in more than $100 million in additional expense versus last year. In addition, we anticipate increased expense from our investments in technology and health, as well as higher variable expenses associated with expected growth. I will now turn the call over to the operator for questions.

[Operator Instructions] We can now take our first question from Anthony Chukumba of Loop Capital Markets. Please go ahead.

Good morning, and congratulations on a strong finish to a -- to an incredible year, particularly given the COVID-19 dystopia that we're all living through. So my question was on the competitive landscape. I mean, it sounds like or I would guess that you're expecting things to be more competitive in 2021, as you said, as the world sort of returns to normal compared to maybe what you saw in 2020. But just would love to have your perspectives on that. That's my one question. Thank you.

Yes, I'll start and Matt can add color. I think we would expect that we actually set it as Matt provided the outlook there to be a higher level of promotionality as we start to lap some of the strengths, obviously, from last year and we start to get into more normalized inventory positions throughout the year. And so part of the color I think that Matt provided for next year would imply that. We likely are going to have to invest a bit more to remain price competitive, which of course, since the beginning has been our priority. So, Anthony, I think your intuition is right there that we would expect things to normalize a bit in terms of promotionality.

Got it. Keep up the good work.

Thanks so much, Anthony.

And we can now take our next question from Chris Horvers of JPMorgan. Please go ahead.

Thank you. Starting with a longer term question and then have a follow-up on something more near-term. As you think about migrating to the new model, obviously, in the consumer electronics, business warranties and accessory attachment are really important. So can you talk about the -- how you see those attachment rates, in-store versus a BOPUS and versus online. Are you building an expectation that you can improve that attachment rate as the consumer becomes more digital?

So I'm going to take a little bit of a step back here in that. I think we strongly believe our competitive advantage is our ability to provide both support and advice across all the channels -- any channel that anyone wants to shop in. And obviously, there are different challenges and different modes of doing that across the different channels. But regardless, we know our employee, or our customers, excuse me, are looking for both that advice and that support across channels. And we've been investing in our capabilities and technology in order to deliver that. We've also talked about the fact that what our customers expect from us from a support perspective has changed over time. And it's less about that break, fix support, although that's still important and we need to be there when that happens. And it's much more about supporting your technology seamlessly across your devices. And it's more about is my printer staying on my network? Or is my content streaming the way that I want it to? And hence, the reason we've been migrating to a model that looks more like Total Tech Support, which provides you obviously coverage for all the technology devices in your home, regardless of where you bought them. And so it's not just about now from -- for your question, specifically, digitally, it's not just about the buying experience, it's actually about using digital across all aspects of the shopping experience. And so we have been working and we are continuing to work and if you think about the investments that Matt mentioned, in technology, we're investing in things like video chats, virtual consultations, adding digital checkout in the app, this is still all empowered by our amazing Blue Shirts [ph] who are actually creating these experiences, we're just creating them digitally. And so while the gross margin rate has been lower online, over time it's constantly improving because we're constantly improving that customer experience. And we are seeing increases in our ability to transact Total Tech Support or digital consultations, we're seeing more in-home advisor leads online as an example. So I think it's hard to replace that expertise and support you get by visiting our stores. But we are seeing customers get more comfortable with experiencing some of those things online. And it's less about exactly what channels have happening and more about how to in every channel we interact with you. We are constantly trying to improve that experience. So to your point and your question, it does become more natural to make the buying decisions in a digital environment.

Understood. And then, on the first quarter gross margin and inventory and promotional environment, I guess, you have a very strong comp guide in the first quarter. And it doesn't sound like you're fully in stock on items. So why would you expect a more promotional environment in the first quarter? I would -- is that something you're seeing already and sort of early? I would certainly expect that to be the case as you progress through the year, but it would seem like all the pieces put together, it wouldn't seem like the promotional environment would really change year-over-year?

Yes, I will start and Mike or Corie can add. Yes, I think, despite the fact that we do expect some elevated sales in Q1, as we start to enter in especially the latter part of Q1, we're going to be seeing a competitive environment where a lot of our competitors are comping some big numbers of themselves. And so we're just aware of where that might take technology and how we need to stay competitive in that environment. So you're right. There's the tale of Q1 is going to be leading up to the time we close our stores. And then we close our stores for a bit of time, the last other week. So there's a lot of different areas within Q1 and we do think towards the tail end of it, we'll start to see a bit more promotions and competitiveness as we start to see competitors react to their own situations.

Understood. Thanks for all the great information.

And we can now take our next question from Michael Lasser of UBS. Please go ahead.

Good morning. Thanks a lot for taking my question. When you laid out your comp guidance for the year, how did you factor in the potential for demand being pulled forward, not just the tougher compares you're going to face in the back half? And do you think the potential for demand being pulled forward exists for a multiyear period or is that unfold because of this wallet to shift back to leisure categories it'll happen pretty quickly and be sustained just for a short period of time? And then I’ve one follow-up on your longer term guidance.

Good morning. This is Matt. I'll take that and Corie or Mike can jump in. I think, fundamentally if we step all the way back, we believe the role of technology in people's lives is only intensified as a result of the pandemic and the proliferation of devices in people's lives will continue to support advancement as innovation continues. So that -- and the role we play in that is extremely important and even stronger than it was before. And so as we look at next year, when we think about it being probably a tale of two halves with growth in the first and then declines in the latter, I think we still see opportunity for innovation to keep fundamentally technology important in people's lives. Clearly, at a micro level there, you could imagine some categories could see a little bit of pull at any given point. But there's also an element of personal savings rates being so elevated now. Right now they're about 14%, which is twice what they were going into the pandemic. So there are a lot of puts and takes in the year. Fundamentally, the guide for next year really incorporates a view that as we get to towards maybe the middle of the year, we start to see that shifting of consumer behavior back to places that were a little muted as the pandemic hits. So we wouldn't characterize the pullback, but just a changing of people deciding to use their wallet.

I think no matter what, Michael, people use of technology in their homes, in particular has changed forever. You have more proliferation and you're going to have more people upgrading more products and more people trying to make different ecosystems all try to work together in their homes, which I think regardless of the puts and takes in any one given year is a good thing strategically for us over the longer term.

Okay. And my follow-up is on the comments around your expectation for your operating margin being above 5%, or the level that you had laid out at your analyst meeting a couple of years ago. And obviously at that time, it was impossible to predict that e-commerce penetration in your business would be as high as it is today this quickly. But presumably now that's a drag relative to what you expected for your profitability back then, is the offset or the entirety of the offset and even more, this new model where you're going to operate a little more efficiently at the store level, or is there other factors that are driving this expectation that your profitability is going to be higher than what you expected a couple of years ago. Thank you.

So I'm going to start with a bit of a strategic lens on that. And then I think Matt can chime in a little bit on the profitability of the [indiscernible] kind of question. When we set that target in 2019, the good news is our strategic hypothesis was spot on. The interesting part is we have made a massive amount of progress even faster, the customer has made a massive amount of progress. We knew digital penetration was going to grow pretty substantially. What we didn't know is that it was going to double in the span of a year. And so we need to take and we are taking the appropriate time to think about the longer term, given these seismic changes that we've seen. And there are lots of uncertainties including the fact we're still in the middle of a pandemic. And so we're testing and piloting a number of different models that are going to balance this kind of urgency for change, with the need to learn how the customer is changing their behavior. But what we can see in front of us, and then what we can see based on the plans we have in places is that we do think there is that room for operating rate expansion. And Matt will talk a little bit about what we're seeing even in the profitability of the channels.

Yes. If you think about the channels, which are increasingly hard to kind of pull apart, as you see elevated levels of online sales, you see a lot more SG&A leverage because there's a lower fixed cost basis to that. And so, while the gross margins are tend to be lower because they don't -- our stores provide an expert service and support that only our people can give. We do see a SG&A cost structure that is less. And so our job is to actually how to optimize both those channels together to provide the same level of expertise and support, but also allow the support and convenience as they work together. But that fixed cost leverage that you get online is important as you start to look further in the year-end with elevated levels of online mix.

Thank you very much and good luck.

Thank you.

And we can now take our next question from Peter Keith of Piper Sandler. Please go ahead.

Hi. Good morning. It's actually [indiscernible] on for Peter. Thanks for taking my question. I wanted to ask about your full year gross margin guidance, expectations to be down a little bit. I was wondering can you just discuss some of the puts and takes there, strategy down a little bit out there 60 basis points of decline this year, and expectations for online next to moderate that. So just wondering any detail there. Thank you.

Sure. So the thing about gross profit next year, what we said was it would be slightly down. I think the biggest part of that are a belief that, like we said that there'll be a bit more promotionality and competitive environment as we start to get into the latter half of Q1 going forward. There's also periods of time where we had some -- our stores closed, we did -- we were able to offer all of our services or installation delivery, there's a little bit of pressure there. In addition, I think, online mix being assumed at 40% versus 43% this last year, is that a meaningful difference in terms of the impact of supply chain costs. So that's why we don't think supply chain costs fundamentally are much of a benefit as you start to move into next year as you are assuming the same amount of sales between the [indiscernible] years. I also think within there, you've got a little bit of -- a promotional favorability was offset by a little bit of category mix changes that'll happen throughout the year. So fundamentally it's that assumption that online mix which stays pretty much the same.

Thanks, Matt. Appreciate that. Maybe just separately, quickly, turning on the semiconductor charges that have been reported recently. Can you discuss how this might be impacting price availability currently, or perhaps in the coming quarters?

Yes. Now it's Mike Mohan in here. Thanks for the question. I think it was around semiconductor availability [indiscernible] , which is clearly a lot of that in the news right now because we need semiconductors in almost everything that's being made. We feel pretty good because we have long-term plans with our vendors upstream for finished goods, whether they're coming from Asia or parts of the rest of the world. And there's sporadic shortages just based on demand peaks right now. Our online of sight to the incoming inventory feels good on where we're at. I think there will some impacts in other industries, but I wouldn't be the expert to speak about it here.

Okay, thank you. Appreciate the color.

Thank you.

And we can now take our next question from Joe Feldman of Telsey Advisory Group. Please go ahead.

Yes. Hi, guys. Thanks for taking the question. I wanted to ask on inventory, how we should think about inventory through this year? It sounded like we're still -- you're still a little chasing in some categories, or where there's some lightness. But I was thinking, you do get back into stock and inventory was up maybe half percent or so this past quarter, which seemed like in a better position. Maybe you can just take us through the year how to think about it, like, should we end the year or come through the year up a little bit inventory, down a little bit? How do we think about it?

Hey, Joe. It's Mike. I will start and Matt or Corie can chime in. We feel better about our inventory position now versus the last four calls we've had. So I'll start with that, because we've finally gotten back into better stock. That That said, we still have constraints in parts of our business that we don't think we will solve themselves in the first half of this year. Gaming is a good example. We have yet to put the new generation of gaming consoles into our stores, we anticipate to do that soon. But we haven't done that because there just hasn't been enough inventory to meet demand. So those are some of the things that pandemic aside, it would have likely been constrained and is only more heightened based on people wanting to dramatically change their at home experiences. Other categories like printing have been constrained since the sort of pandemic and there's some challenges in that industry at large getting back into a better inventory position. I think it was some of the bigger categories around computing and home theatre, we're going through some natural time transitions. This would be our second home theatre transition as an example during a pandemic. And I think our vendors are getting smarter about the timing of new model introductions, and then what do they use for demand generation. So I can't give you a good window as to what our inventory will look like 12 months from now. I feel we're going to be in better stock overall, but we'll still have a handful of constraints that we have to navigate through. I think the one thing our teams really do well, and I know that you know this, but we work so far upstream [ph] with all of our partners with collaborative forecasting, demand generation, even feature sets on models, which then actually help us give us help -- give our vendors the best forecast possible. So I always look at our forecast accuracy and percent to fill and I feel really good about what I can see going forward and then the rest is based on consumer demand. And I think Matt talked about there's some things on the back half of this year that we have to plan for two different vectors on and I know our teams will be ready.

Got it. Thanks. And then, if I could ask a follow-up on a separate topic. With regard to digital in the stores and fulfillment, like I guess, when you were talking about retraining re-skilling, is that related to having to teach the employees to do a better job of fulfilling orders and shipping and doing things beyond [technical difficulty] servicing the electronics, support when people come in? Like is it more about the digital support than the in-person support?

Thanks for the question, Joe. It's a little bit about everything you just mentioned, in fact. And so in other words, there are multiple ways in which employees can in many cases opt into gaining further certifications and skills. Sometimes that looks like within the four walls of the store. I might opt into garnering more skills in home theatre and computing, I might opt into garnering more skills around services, therefore I am more flexible throughout the store. In some cases, that might also mean I am willing to spend some of my time doing fulfillment work, fulfilling on car side -- curbside, excuse me, orders, or packing inventory in the back out of some of those ship-from-store locations. So I may add those skills, which might add more hours and more flexibility. And then there are some real digital experiences that we are leveraging our associates for. I might opt into being able to answer calls from a national call queue, while I'm on my shift, it's not that busy, and I can pick up a customer's question by a call, or I might opt into being more of a -- an expert that's virtual, that can help you with whatever your question is in a virtual connection through our app. All of those are different ways in which we're rescaling. And then you can imagine on top of that, there might be flexibility to go work in a supply chain location, or there might be flexibility to train myself into more of a technology job and be able to do that remotely. And so in all of those different vectors, we are actually starting to create training modules and create opportunities for our employees, not just for us to them flexibly, but for them to flexibly opt into different roles and different hours in a way that might meet their lives with a little bit more flexibility and progress their careers, frankly.

That's helpful. It makes a lot of sense. And good luck this quarter. Thanks.

Thanks, Joe.

And we can now take our next question from Karen Short.

[Technical difficulty] fiscal '22 in terms of operating margins with respect to that 5% target. So when I look at the ranges that you provided, I kind of back into a range of EBIT margins of 4.2% to 4.7%. And so I guess, in the context of that 5% target remaining intact, that does seem like a fairly, at least on the low end, big leap to make to get that to the 5% target. So I'm wondering if you could comment a little bit on that. And correct me if I'm wrong in terms of the math on that range? And then I had a follow-up.

Sure. I think for the full year, if we think about the top -- if we use the top end of the range, zero comp, we're likely -- our math would indicate a range that's a little bit higher than that, about 5%. That's assuming a 3%-ish sales, our SG&A increase and slight moderation or decline in operating or gross profit rate. So we -- the top end of the range should imply something that's a little north of five. Now certainly as you start to slip towards the bottom of that range, we'll look at decisions that we need to make to see if we -- where we want to end the year from an operating rate perspective. We do believe we're in a very strong position financially and we probably would resist making short-term decisions to overly manufacturer rate when we know we need to invest for our future so, but the top end of our guidance should imply something north of 5%.

Okay. And then wondering just generally speaking, I know you gave a lot of details on the number of employees. Could you maybe just talk a little bit about what you think the optimal full time versus part time mix was? And as you said, obviously, you skewed or you had, I think a higher percent of full time but not by -- not that much. So wondering how you're thinking about that optimal mix with 102,000 in mind?

Yes, it's a little hard for me to say what's optimal when we're still striking the balance between learning about what we think the right operating model is for the future and where we are today. And so I don't -- I would hesitate to comment on what we think the optimal mix is. I think what's important for us right now is we are trying to build in flexibility that will allow us to meet the customer wherever they're deciding to interact with us across those channels. And we'll bring a little less about exactly what the optimal mix is and instead really trying to figure out how best can we use that and play our space across all the things that we need to do, and therefore staff appropriately against that. So I -- optimal, I don't think we know yet, given that we're still in the midst of a pandemic, we still have a lot of unknowns in front of us. But we do feel pretty strongly that we are now set up in a better position to be able to flex with the changing customer dynamic.

Great. Thanks very much.

Thank you. Oh, and with that, I think that was our last question. I want to thank everyone for joining us today and we look forward to updating you as we continue to progress against our strategies. Have a great day.

Ladies and gentlemen, this concludes today's call. Thank you for your participation. You may now disconnect.