Home Depot Inc (HD) announced late Monday a $1 billion stock buy-back plan through an accelerated share repurchase program with Barclays Capital (BCS). The Atlanta-based home improvement retailer said it would finance the move by a debt issuance of $2 billion senior notes. Half of the funds will be used for the buyback, while the remainder will be used to refi senior notes that came due in March 2011.
The accelerated share repurchase is in addition to the company’s previously announced plans to repurchase some $2.5 billion of outstanding shares throughout fiscal 2011 using excess cash generated by the business.
“Creating strong shareholder value is a priority, and we are committed to returning capital to our shareholders in the form of dividends and share repurchases,” said Frank Blake, the company’s chairman and CEO, in a statement. “2010 was the first year of positive sales growth since 2006 and our business continues to stabilize.
Blake continued: “As such, we elected to take advantage of the attractive interest rate environment and raise incremental debt capital to be used for share repurchases.”
Home Depot launched its stock buy-back program in 2002 and cumulatively through the end of 2010 had bought about $30.1 billion of its outstanding common stock. At the end of fiscal 2010, Home Depot was authorized to repurchase up to $9.9 billion worth of its common stock.
The co. reiterated Monday it expects sales to be up about 2.5% for 2011 and diluted earnings p/sh from continuing operations to be up approximately 9.5% to $2.20, excluding the impact of share repurchases.
Home Depot shares, which closed at $36.65 on the NYSE, were up 33 cents, or 0.90%, at $36.98 in after-hours trading. The stock has gained more than 14% in the past year.