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Foot Locker Plans $1 Billion Share Repurchase and Increased Investment in Store Fleet

Foot Locker has some cash to spend.

The footwear retailer has revealed its plans to allocate the capital it has built up over several successful quarters, including a $1.2 billion share repurchase program, a quarterly cash dividend of 38 cents per share and a new expenditure program that will see the retailer pump $275 million into its infrastructure.

Inside of its Q3 financial report released in November, Foot Locker said it had cash and cash equivalents worth a total of $748 million, compared to a debt of only $124 million. At the time, Foot Locker’s CFO and EVP, Lauren Peters, said the company’s comfortable financial position would give it room to continue investing in the business for the long term.

Since then, Foot Locker has announced investments in up-and-coming brands like Super Heroic and community programs like the Pensole Academy in Englewood, California. It’s $100 million investment in sneaker resale platform, GOAT, may have also changed the face of sneaker resale.

With its most recent dividend, equal to $1.52 EPS at an annualized rate and the ninth consecutive year with a double-digit increase in payout (10 percent in Q4), Foot Locker says it has fulfilled its duty to its shareholders while successfully growing the business.

“As we look at 2019, we see exciting opportunities to invest in our business and continue to build on our unparalleled strengths,” Richard Johnson, chairman and CEO of Foot Locker, said. “Taken together, these actions demonstrate that our board is confident that Foot Locker, Inc. can simultaneously deliver strong financial results, invest in the long-term growth of the business, and provide meaningful returns to our shareholders.”

The number of shares available to the public will be decreasing, however, as part of the company’s $1.2 billion share repurchase program. Previously, Foot Locker approved a separate but identical $1.2 billion share repurchase, spending $817 million under that program in two years. The program’s renewal will see an additional three-year period of repurchases, extending through to 2022.

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As far as the $275 million in increased capital expenditure, the retailer has not given out any specifics except that it will reflect a higher level of investment in its store fleet for all existing regions. The day before Foot Locker’s blockbuster GOAT investment, it also announced that it would be increasing its presence in Asia—and the retailer specifically mentioned that as an area that will benefit from a bigger budget.

Compared to the $200 million spent in FY18, Foot Locker’s new budget represents an increase of more than 25 percent in infrastructure investment.