Walmart’s Awful $15 Billion Share Repurchase

Do they do this just to annoy me?

At its 40th Annual Meeting of Shareholders today, Wal-Mart Stores, Inc. announced that its Board of Directors approved a new repurchase program that authorizes the company to repurchase $15 billion of its shares. This program replaces the previous $15 billion program, which was announced June 5, 2009 and had approximately $4.7 billion of remaining authorization. Under the program, repurchased shares are constructively retired and returned to unissued status.
“Share repurchase and dividends represent great ways to return value to our shareholders. In fact, in the first quarter of fiscal 2011, our $3 billion purchase representing 55.6 million shares, was a record for Walmart,” said Tom Schoewe, Wal-Mart Stores, Inc. executive vice president and chief financial officer. “During the past three years, our commitment to share repurchase was reflected in the company buying $18.5 billion of shares. In addition to share repurchase, Walmart will pay shareholders more than $4.5 billion in dividends during fiscal year 2011.”

A great way to return value to shareholders is to return money to shareholders. Notice that a back buy announcement is in dollar figures not share figures because the share price will move, and not always in the way you want.
Walmart (WMT) has 3.76 billion shares outstanding so $15 billion is about $4 a share on a $51 stock. The stock is exactly where it was 11 years ago. This is another example where shareholders would have been much better off with dividends instead of stock repurchases.

Posted by on June 4th, 2010 at 10:40 am


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