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Kroger, Supervalu unveil share repurchase programs

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NEW YORK — Supermarket giants Kroger Co. and Supervalu Inc. have announced new stock buyback programs.

Supermarket giants Kroger Co. and Supervalu Inc. have announced new stock buyback programs.

Kroger’s board on Thursday authorized the repurchase of $500 million of common stock, replacing the $225 million remaining under the $1 billion repurchase program announced in January 2008. The timing of the repurchases will vary according to market conditions, the company said.

Kroger reported that it plans to use free cash flow to repurchase shares, pay dividends to shareholders and maintain its current debt rating. The company has returned $6 billion in total stock repurchases to shareholders since January 2000 and $929 million in dividends to shareholders since the dividend program was initiated in 2006. From January 2000 through the end of the first quarter in fiscal 2010, Kroger reduced total debt by $1.5 billion.

"This new share repurchase authorization reflects the board’s confidence in Kroger’s Customer 1st strategy and the Kroger team’s ability to continue to deliver results and reward shareholders, both today and in the future," Kroger chairman and chief executive officer David Dillon said in a statement.

Meanwhile, Supervalu’s board on Thursday adopted a new annual share repurchase program authorizing the company to buy up to $70 million of its common stock through June 30, 2011.

The share buybacks will be made from time to time in open-market purchases primarily from the cash generated from the settlement of stock options, according to Supervalu. The new annual stock repurchase program replaces the existing $70 million buyback program authorized in May 2009, in which about 220,000 shares were repurchased at an approximate cost of $2.9 million, the company said.

Kroger’s shares closed Thursday up 4 cents to $20.16, while Supervalu saw its shares fall 30 cents for the day to $12.12.

With the economy gradually recovering and some large companies with a surplus of cash, stock buybacks are up. Standard & Poor’s reported Thursday that share repurchases by S&P 500 companies for the 2010 first quarter swelled 79.5% versus the prior-year period. After information technology firms, companies in the consumer staples sector had the most buyback activity, and that industry segment saw stock repurchases soar 171% in the quarter from a year earlier.

Other large mass-market retailers announced big buyback programs earlier this month, including Walmart ($15 billion), CVS Caremark ($2 billion) and Dollar Tree ($500 million).


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