Staples Inc. (SPLS), the leading U.S. office supply retailer, Friday affirmed its full-year earnings forecast and announced a $1.5 billion stock buyback, sending its shares up 3 percent.

Staples said it expects third-quarter earnings of 32 cents a share and full-year profits of $1.11 a share, in line with average analysts' forecasts, according to Reuters Estimates.

The retailer also said it sees third-quarter sales growth and full-year revenue growth in the low double digit percentage range.

The company forecast 2006 earnings per share of $1.20 to $1.26, after adjusting for stock option (search) expensing. Analysts' average profit forecast for the same period is $1.27, according to Reuters Estimate.

Staples said its board authorized an additional buyback of up to $1.5 billion of common stock, which will begin when the existing $1 billion repurchase program is expected to be completed in November. The new program is expected to run through 2007.

The Framingham, Mass.-based retailer added that its board recommended that its shareholders declassify the board. Currently, the board is split into three classes with directors elected to staggered three-year terms. Under the proposal, each director will stand for election annually.

Staples' shares were up 60 cents at $21.95 on Nasdaq. Its shares have fallen 3.6 percent in the last three months, compared with a less than 1 percent drop for rival Office Depot Inc..

Staples currently trades at 19.7 times 2005 earnings, versus 20.6 times for Office Depot's (ODP).