Shop Talk

Retailers, consumers and prices

Check Out Line: Is that enough buyback, Nelson?

September 29, 2010

USA/Check out Family Dollar’s plans for a surge in store openings and $750 million stock buyback plan.

The retailer, which prices most of its goods under $10, said on Wednesday that it plans to open 300 new stores in fiscal 2011, 50 percent more than it opened in fiscal 2010, which ended in August. It also authorized a new share repurchase plan that it said would lower its cost of capital.

Back in July, activist investor Nelson Peltz’s Trian Fund management announced a 6.6 percent stake in Family Dollar and said it suggested several ways for the company to boost shareholder value. Taking on debt for a buyback was one thing Peltz’s group said it suggested. Family Dollar said it could take out debt for the buyback plan it announced, but that it would also use cash on hand and cash from operations.

No word from Peltz yet on whether the buyback plan is aggressive enough.

But the company also forecast fiscal 2011 earnings that would beat most analyst estimates. Its stock rose more than 3 percent and is now trading more than 13 percent higher than it was when the Trian stake was announced.

So on paper, at least, shareholders stakes have more value right now.

Also in the basket:

DineEquity agrees to sell 86 Applebee’s

Beiersdorf jumps as P&G CEO admits interest

Toy makers fight for exemption from rules (N.Y. Times)

(Reuters photo)

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