Costco Wholesale Corp., the largest U.S. warehouse-club chain, plans to return $2.2 billion to shareholders through the payment of a special dividend after its cash hoard swelled.
The $5-a-share distribution will be funded from existing cash and additional borrowings, the Issaquah, Washington-based company said Friday in a statement.
The move underscores Costco’s success in weathering a shaky retail industry over the past year. Excluding fuel, the company’s same-store sales jumped 8 per cent in December, topping the 6.6 per cent gain that analysts had projected.
The amount being returned is about equal to the company’s net cash balance as of Aug. 31, the end of its last financial year, according to data compiled by Bloomberg. It’s the first such payment by Costco since it handed back $3 billion to shareholders with a $7 a share distribution in December 2012.
“Our strong balance sheet and favorable access to the credit markets allow us to provide shareholders with this dividend, while also preserving financial and operational flexibility to grow our business globally,” Chief Financial Officer Richard Galanti said in the statement.
Costco shares rose 1.7 per cent to $142.99 at the close in New York. The stock increased 19 per cent in 2014, its sixth straight year of gains.
The special dividend will be paid on Feb. 27 and is in addition to the regular quarterly dividend of 35.5 cents a share that was declared on Jan. 29, Costco said.
News by Bloomberg, edited by ESM
