Best Buy to expand; raises dividend, share buyback

Best Buy, the top U.S. consumer electronics retailer, saw its shares rise 2 percent in early trading.

The plan comes after Best Buy reported quarterly earnings last week that missed analysts' estimates by a wide margin and gave a disappointing full-year forecast as television sales cooled.

In a statement, Chief Executive Brad Anderson said that Best Buy sees "so much opportunity for customer growth," particularly in the United States.

The Minneapolis-based company said the number of stores in the United States and Canada could approach 1,800, up from its prior plan to have 1,400. It currently has 1,035 Best Buy, Future Shop and Pacific Sales stores in those markets.

Best Buy also said it remained committed to expanding in China with the Five Star and Best Buy brands.

Best Buy also said it would retire its existing $200 million credit facility and replace it with a committed $2 billion five-year revolving credit facility.

ACCELERATED BUYBACKS

The $5.5 billion buyback plan, which terminates and replaces a $1.5 billion repurchase program announced on June 21, 2006, should have a modest benefit on fiscal 2008 earnings per share, Best Buy said.

The company said it would use part of the new repurchase program to execute an accelerated share repurchase program to buy back $3 billion of common stock no later than February 2008. It plans to fund the $3 billion of repurchases through cash, short-term investments and interim borrowing.