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MINNEAPOLIS-Best Buy Co. executives have increased their growth plan for total number of US superstores by 20%, to 1,200, and intend to enter China. The retailer will also open 20 to 50 stand-alone Geek Squad stores, which provide technical support for electronics, in urban areas over the next 12 to 18 months.
Best Buy currently operates just under 840 superstores in North America--about 675 in the US and the rest in Canada, where the company also has superstores under the Future Shop name. The new expansion strategy calls for 1,000 US units and 200 in Canada. Most of the new store openings will be in smaller, 20,000-sf formats, so that the chain can expand easier into smaller markets, metro areas and between large-format units in suburbs.
Company officials did not give a timetable for the growth in China (a Best Buy spokesperson was not immediately available for comment for this story), but the retailer already has three sourcing offices in the country, in the cities of Beijing, Shanghai and Shenzhen. The growth in the world's most populous country will involve "strategic investments of a manageable size," according to a company statement.
Geek Squads are already located as departments in all Best Buy units, and now the company is pushing the concept as a stand-alone chain. The company has already tested five of the units in stand-alone markets, and executives say they expect that the stores will bring to the company new customers that do not currently shop at Best Buys.
Additionally, Best Buy's board has authorized a $1.5-billion stock repurchase program in conjunction with the store expansion. The move replaces the retailer's $500-million authorization announced in June. The company has already purchased 3.9 million share for $200 million this year.
During its latest quarter, which ended Feb. 26, Best Buy posted a same-store increase of 2.8%. The retailer recorded earnings from operations of $522 million, or $1.55 per diluted share, an increase of 11% compared with $469 million, or $1.40 per diluted share, from the same period last year. Similarly, fourth-quarter revenue increased 9% to $9.2 billion, compared with revenue of $8.4 billion for the fourth quarter of fiscal 2004.
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