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· Posted on
February 21, 2024

JB Hi-Fi will give $250 million back to shareholders via an off-market buyback

Uhh...is it too late to get in on the million-dollar fun? We want in!

What's the key learning?

  • JB Hi-Fi's sales climbed 4.3% in January, and the company will return $250 million of capital back to shareholders via an off-market buyback
  • Share buybacks occur when companies offer to re-purchase some of their shares from existing shareholders
  • Off-market buybacks are when the buyback doesn't occur on an exchange...Instead, the company makes the offer directly to shareholders.

Background: JB Hi-Fi is the largest home entertainment retailer in Australia...and they've been hitting all the right notes over the last few years.

What happened: In January, JB Hi-Fi's sales climbed 4.3%. That's despite supply chain issues (yup, we just keep bangin' on about it).

What else: Now, the company is planning to return up to $250 million of capital back to shareholders via an off-market buyback. And investors likey - they sent shares up 7% on the news.

So what's the key learning?

💡 Share buybacks occur when companies offer to re-purchase some of their shares from existing shareholders. So if the company has 10 million shares available on the open market...they might buy back 1 million, leaving 9 million out there.

💡Since there are less shares available on the market, the company's profits are spread over fewer shares. That often means those shares end up being worth more.

💡Share buybacks can be done in one of two ways:

  1. On-market buybacks: when a company buys its own shares on an exchange during trading hours
  2. Off-market buybacks: when the buyback doesn't occur on an exchange. Instead, the company makes the offer directly to shareholders. This is what JB Hi-Fi is doing.

‍

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