Retailer GameStop has announced plans to buy back $300 million of its own shares, a move that would add 10 percent to its earnings per share.
Alongside the move, the company stated it expects its cash flow to stay at or above existing levels in the year to come, a major vote of confidence in video game industry growth and stability in an uncertain time.
As evidence of its ongoing solvency, the company noted it's opened 2,000 new stores, purchased French chain Micromania, and paid back $500 million in long-term debt over the past three years, and says it will continue to be similarly well-heeled going forward.
Specifically, GameStop says it'll close fiscal 2009 with $700 million in cash on hand. In 2010, it'll open 400 new stores to the tune of $200 million, put aside $100 million for potential acquisitions, and spend $300 million on the share repurchase programs -- and still close out next year with $700 million on hand.
"As GameStop expects to generate significant excess cash over the next several years, we are pleased that the Board has authorized this program as our equity represents a very attractive investment opportunity," says CEO Dan DeMatteo in a statement.
He continues: "This capital allocation plan underscores the financial strength and long-term confidence of our company and returns significant capital to shareholders even as we continue to expand worldwide."
Analysts reacted positively to the move, although without visibility on when the retailer will actually finish the buyback, few made adjustments to their models for the company.
