Wal-Mart Stores Inc. (WMT), the world’s largest retailer, recently announced a new repurchase program that authorizes the company to buyback $15 billion of its shares. This program replaces the previous $15 billion program, which still has approximately $4.7 billion of remaining authorization. The company had a cash balance of $8.5 billion as of Apr 30, 2010.
In addition to $18.5 billion worth of share buyback in the last three years, Wal-Mart continues to increase its dividend every year from 5 cents a share in 1974 to $1.21 a share in fiscal 2011, reflecting a growth of 11% over $1.09 a share in fiscal 2010. Wal-Mart expects to pay more than $4.5 billion in dividends in fiscal 2011. Traditionally, an increase in stock authorization and dividend is encouraging as it boosts shareholder’s value.
With prudent capital allocation, industry-wide price leadership, and improvement in inventory levels and continued expense control, the discounter has been able to maintain robust financial position, and excellent debt rating. The retailer generated $973 million in operating cash flow in the first quarter 2011, after spending $2.6 billion on capital expenditure and $2.7 billion on share repurchases.
Based in Bentonville, Arkansas, Wal-Mart is the world’s largest retailer, operating 4,364 domestic stores and 4,081 international locations in 15 countries as of Apr 30, 2010. Wal-Mart serves customers and members more than 200 million times per week at more than 8,400 retail units under 53 different banners in 15 countries.
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