Based on the company’s strong results for the last financial year, the board of directors at Whole Foods Market has approved a US$100m increase in its stock repurchase programme, doubling the current authorisation to $200m in the next three years.
In the fiscal year ended 24 September 2006, Whole Foods produced $453m in cash flow from operations and received $222m in proceeds from the exercise of stock options. During the period, the company invested $340m, of which $209 was spent on new store openings. The company also paid about $358m in dividends to shareholders and repurchased around two million shares at a cost of $100m. The company ended the year with cash investments of approximately $256m and long-term debt of $9m.
“In fiscal 2006, we produced very strong operating results,” said John Mackey, chairman, chief executive officer and co-founder of Whole Foods Market. “We believe we will continue to produce strong cash flow from operations, and this authorisation, which allows us to selectively repurchase our stock, is in line with our goal of maximising our returns on invested capital to our shareholders.”
The timing and repurchase amounts will vary depending on market conditions, regulatory laws and other factors. The repurchases will be made using the company’s available cash resources and credit line.
The news has been generally well received by the market, with shares in Whole Foods rising following the announcement yesterday (7 November), increasing from an opening price of $46.70 to close at $47.47.