Back to top

Analyst Blog

Dillard’s Inc. (DDS - Analyst Report), a leading fashion apparel, cosmetics and home furnishings retailer, recently declared that its board of directors has approved a new share repurchase program. The new program reflects the company’s sound financial position and well-defined future prospects.

The new open-ended share repurchase authorization permits Dillard’s to buy back a maximum of $250 million of its Class A shares. Under the authorization, the company can repurchase its shares either from the open market or through privately negotiated transactions.

The new authorization came after the company completed its previous $250 million share buyback program approved in Feb 2012. As of Feb 2, 2013, Dillard’s had authorization worth nearly $92.0 million remaining under its share repurchase program.

Dillard’s has always been committed to creating value for its shareholders by returning capital in the form of dividends and share repurchase program. On Feb 28, the company declared a quarterly dividend of 5 cents per share on its common shares, payable on May 6, 2013 to stockholders of record as of Mar 28, 2013. Apart from this, in Dec 2012, the company paid a special cash dividend of $5.0 per share to the shareholders’ of record date on Dec 7, 2012.

Dillard’s strong balance sheet and cash flow provide financial flexibility in shareholder-friendly moves, and store and online business expansions. During fiscal 2012, it shelled out $185.5 million on share repurchases and $252.3 million on cash dividends. The company generated operating cash flow of $522.7 million, while cash and cash equivalents stood at $124.1 million at the end of the fiscal year.

Other companies that recently announced new share repurchase authorizations include Nordstrom Inc. (JWN - Analyst Report), Discover Financial Services (DFS - Analyst Report), and Mondelez International Inc. (MDLZ - Analyst Report).

We believe that dividend payments and share repurchases not only enhance shareholder’s return, but also raise the market value of the stock. Through dividend payments, companies bolster investors’ confidence, persuading them to either buy or hold the scrip instead of selling. Looking ahead, Dillard’s remains confident of its growth potential, suggesting enhanced value for shareholders via dividend payout as well as share buybacks.

Please login to Zacks.com or register to post a comment.