Shares in Ahold rose by more than 4% this morning (4 March) despite an 8% fall in quarterly profits after the Dutch retail giant said it would hand EUR500m (US$682.8m) back to investors.

The company, which runs the Albert Heijn chain in the Netherlands, as well as Stop & Shop and Giant Food in the US, booked an 8.2% fall in fourth-quarter net profit to EUR267m.

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Quarterly operating profit dropped 7.6% to EUR341m as promotions and trading down by consumers hit margins.

Net sales were up 3.4% at EUR6.8bn thanks to increased sales volumes in the Netherlands and the US. Stripping out the effect of currency exchange, net sales climbed 11%.

CEO John Rishton said Ahold had put in a “solid” performance in a “challenging environment” during the fourth quarter.

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“Sales and margins continued to be impacted by deflation, trading down and increased promotions. We successfully managed, however, the balance between sales and margins, and we improved market share and increased volumes in the Netherlands and the United States,” Rishton said.

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Retail analysts had been expecting Ahold to indicate what it would do with its cash, even after the retailer moved to buy a clutch of Supervalu Inc stores and the Ukrop chain in the US.

Rishton said Ahold would push forward with a programme to buy back shares over the next 12 months to the tune of EUR500m, as well as increase its dividend by 28%.

Ahold’s shares were up 4.2% at EUR9.58 at 10:18 CET.

Click here for the full release from Ahold; check back later for coverage of the retailer’s call with analysts this afternoon.