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First a dividend, now a share repurchase program.
With a huge pile of cash and no big plans to spend it, Chico's FAS is starting to return some of it to shareholders.
While some investors might grumble that it signals Chico's isn't a hot growth prospect, a dividend and share repurchase program may be the wisest course to take at this point. That's especially so considering the propensity for corporate managers generally to make dumb moves when there's a pile of money lying around.
As of July 31, the Fort Myers-based women's retailer reported $487.3 million in cash and marketable securities and no debt on its balance sheet. That enviable cash position is up 15% from the beginning of the year.
On Aug. 18, Chico's board of directors authorized a $200 million stock repurchase program (symbol: CHS) that will be in effect until January 2013. That comes on the heels of a 4-cent quarterly dividend announced in February.
In a conference call with analysts, Chico's executives said the share-repurchase program wouldn't interfere with potential acquisitions if opportunities presented themselves. “We don't need to make an acquisition to grow,” says Kent Kleeberger, the company's executive vice president, chief financial officer and treasurer.
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