Best Buy beat Wall Street's view for profit and sales in its holiday quarter and forecast stronger-than-expected earnings in the current year as demand for electronics resurged in an improving economy.

The U.S. electronics chain, which gained market share in its first holiday season after archrival Circuit City went bankrupt, also announced plans to resume share repurchases and open new stores in both domestic and international markets.

The news boosted Best Buy's stock by nearly 7 percent and also added optimism on Wall Street in addition to reports of a decline in jobless claims. Both the Dow Jones industrial average <.DJI> and the Standard & Poor's 500 Index <.SPX> opened higher.

The key selling season was helped by demand for notebook computers, mobile phones and flat-screen televisions. Trends tell me staying connected (with technology) has become a non-negotiable for millions of people and that some of the things we offer no longer fall under the category of discretionary purchases, CEO Brian Dunn said on a conference call.

Timothy Ghriskey, co-founder of investment firm Solaris Group, echoed Dunn's views.

It is almost as if electronics are somewhere between discretionary and non-discretionary...They have almost become a staple, Ghriskey said. The consumer is coming out of hiding here, he said, calling Best Buy's outlook conservative.

Best Buy's net profit rose to $779 million, or $1.82 a share in the fourth quarter ended February 27, up from $570 million, or $1.35 a share, a year earlier.

Net revenue rose 12 percent to $16.55 billion. Same-store sales, or sales at stores operating for at least 14 months, rose 7 percent.

Analysts on average were expecting a profit of $1.79 a share, excluding items, on revenue of $16.08 billion, according to Thomson Reuters I/B/E/S.

BETTER VIEW FOR 2011

For fiscal 2011, Best Buy expects to earn $3.45 a share to $3.60 a share on revenue of $52 billion to $53 billion. Analysts on average were expecting a profit of $3.37 a share on revenue of $52.14 billion. It sees same-store sales up 1 to 3 percent.

In another sign of potential demand for higher-margin electronics, LG Electronics <066570.KS> said it aimed to sell nearly 1 million 3D televisions this year.

While also fending off growing competition from Wal-Mart Stores Inc and Amazon.com Inc , Best Buy has benefited from investing more in customer service, such as promoting Twelpforce to answer queries on Twitter and providing its Geek Squad repair assistance to shoppers.

Best Buy said its domestic segment gained market share by about 260 basis points for the three months ended January 31, as compared to the prior-year period. Its online sales rose 20 percent to about $2 billion in fiscal 2010.

It plans to open 50 to 55 large-format stores and 75 to 100 small-format stores, mainly mobile phone shops, in the United States. It also plans to open 10 to 15 stores in China.

Gross profit dollars rose 10 percent in fourth quarter, but its gross profit margin fell to 24 percent of revenue, compared with 24.6 percent in the year-earlier period.

Best Buy, which has $2.5 billion remaining under its existing board-approved share repurchase authorization, said its outlook excluded the potential share repurchases.

(Reporting by Dhanya Skariachan, editing by Michele Gershberg and Dave Zimmerman)

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