Numerous stock buyback or repurchase authorization announcements were made throughout 2024. For the most part, they have become commonplace. A buyback authorization is not an obligation or requirement to buy back stock but more so permission to repurchase shares. The company has the option to buy stock whenever it chooses under the conditions of the buyback plan.
This distinction is critical as investors tend to believe a stock repurchase authorization means the company is immediately and furiously buying its stock up in the open market. This belief is further enhanced by the price gap that tends to follow such announcements. Companies that have historically followed through with their buyback programs and as well as issued large buybacks accompanied by positive news tend to garner the most market enthusiasm. Here are three stocks that authorized $1 billion stock buyback programs in 2024.
Williams-Sonoma: $1 Billion Buyback Is Just the Icing on the Cake as Margins Improve
A stock buyback can compound the upside on strong earnings news. Upscale home, kitchen, and furnishings specialty retailer Williams-Sonoma Inc. (NYSE: WSM) reported stellar fiscal third quarter 2025 earnings. The consumer discretionary sector leader operates Pottery Barn, West Elm, Williams-Sonoma, Rejuvenation, Mark and Graham, and Green Row stores. It also owns premium brands, including Waterford, Ridel, Le Creuset, Hestan and All-Clad. The company targets affluent consumers with higher disposable incomes, ranging from cooking aficionados and home enthusiasts to Millennials and Gen-X-ers willing to pay up for premium craftsmanship and quality in their kitchen tools, home goods, and gourmet food. This demographic was also a strong driver for RH (NYSE: RH) blowout earnings.
Improving Metrics Continue to Accelerate Into the Holiday Shopping Season
Williams-Sonoma reported Q3 EPS of $1.96, beating consensus estimates by 19 cents. Revenues still fell 2.9% YoY to $1.8 billion but firmly beat consensus estimates of $1.78 billion. Its comparable brand revenue fell 2.9% YoY. While negative, it was an improvement from Q2’s 3.3% YoY decline. Pottery Barn sales fell 7.5% YoY, while Williams-Sonoma flagship brand sales dipped 0.1%, still an improvement. Pottery Barn Kids had positive comps of 3.8%.
However, its gross margin shot up 230 bps to 46.7%, driven by a higher merchandise margin of 130 bps and 100 bps of supply chain efficiencies. These improvements are expected to flow into a solid holiday shopping season as indicated by its enhanced fiscal 2025 forecast of $7.52 billion to $7.63 billion, up from $7.44 billion to $7.63 billion. Comps are expected to improve from negative 4.5% to negative 3%, from prior guidance of negative 5.5% to negative 3%. The company also announced a new $1 billion stock buyback program authorization. The guidance raise, buyback news, and the 11.14% short interest triggered a perfect storm short squeeze, causing shares to surge 27.5% higher the following day.
Williams-Sonoma CEO Laura Alber enthusiastically stated, "Our strategy of focusing on returning to growth, enhancing our world-class customer service, and driving margin is working. And, as we head into the last quarter of the year, we are optimistic and confident about our business. The fourth quarter is the time of year when we shine. And, therefore, we are raising our full-year guidance.”
BJ’s Wholesale Club: Outsized $1 Billion Stock Buyback Offsets Lower Guidance
A stock buyback can often offset negative news and underscore the positive news. Warehouse club retailer BJ’s Wholesale Club Holdings Inc. (NYSE: BJ) saw its stock soar 14% after reporting its Q3 2024 earnings and the announcement of a $1 billion stock buyback program with an expiration in January 2029. The company reported Q3 EPS of $1.18, firmly beating consensus estimates by 25 cents. This was the largest EPS beat in nine quarters.
Revenues grew 3.5% YoY to $5.10 billion, falling slightly short of the $5.12 billion consensus estimates. This was a sizeable improvement over previous sequential revenue growth of 2.4% and 0.6% in the previous two quarters. Total comp club sales rose 1.5% in Q3. Excluding gas sales, comps rose 3.8% in the quarter.
Port Strikes Pulling in Q4 Sales as Guidance Is Lowered
The company asserts that the comp corporate sales jump was temporarily positively impacted by a port strike and two hurricanes of slightly less than one percentage point. Members stocked up on items in anticipation of the East Coast port strikes. Digital-enabled comps rose 30% YoY. Q3 was also its 11th straight quarter of rising traffic growth. Grocery and sundries saw 4% comps with notable strength in dairy, meats, and produce. Home and apparel segment selections are improving by the quarter, and members have taken note of the growing assortment of books and toys.
For Q4, BJ's expects EPS of 78 to 88 cents versus 97 cents consensus estimates. Q4 comp club sales are expected to rise 2.5% to 3% YoY, which brings the full-year 2024 growth to 2.3% to 2.4%. This is likely the result of all the buying ahead of time from its members in anticipation of the port strikes.
Membership Growth of 8% Is the Real Driver
Membership growth was strong, rising 8% YoY, hitting a record 7.5 million members. It doubled membership in its premium tiers. BJ's will increase its membership fees for the first time in seven years. As of Jan. 1, 2024, Club membership will rise $5 to $60 annually, and its Club+ fee will rise $10 to $120 per year. The $1 billion stock buyback is relatively large compared to its market capitalization of just $12.83 billion. Shares surged over 12% following the announcement.
Corteva: $3 Billion Buyback to Revive the Stock
Sometimes, a stock buyback is what a stock needs to revitalize investor sentiment. In 2019, agricultural sciences company Corteva Inc. (NYSE: CTVA) was the agriculture division spin-off from DowDuPont. DowDuPont had split into three independent publicly traded companies, including Corteva, technology-based materials maker DuPont de Nemours Inc. (NYSE: DD), and specialty chemical and materials manufacturer Dow Inc. (NYSE: DOW).
Market Headwinds Result in Ugly Q3
Corteva specializes in crop protection and seeds. Its third-quarter earnings were ugly as it reported a loss of 49 cents per share, missing consensus estimates by 19 cents. Revenue fell 5% YoY to $2.46 billion, well below the $2.7 billion consensus estimates. Latin America was a major headwind, specifically in Brazil, as sales fell from weather and reduced corn planted areas. Market dynamics caused prices to decline 5% in Latin America in addition to currency headwinds from a stronger US dollar.
Lowering the Bar in 2024 and 2025
Corteva issued lowered EPS guidance for the full-year 2024 of $2.50 to $2.60, down from previous guidance of $2.60 to $2.80, versus $2.67 consensus estimates. The company also lowered full-year 2025 revenue to $17.3 billion to $17.7 billion versus $17.95 billion consensus estimates. This caused shares to plummet 10% in the following days, from $61.74 to a low of $55.18.
$3 Billion Stock Buyback Reawakens Investors
A large stock buyback authorization can accentuate a new strategy while bolstering sentiment and the underlying stock price. On Nov. 19, 2024, Corteva outlined a new strategy to deliver value to shareholders and accompanied it with a massive $3 billion stock buyback, which caused shares to surge from $57 to $61.
Corteva unveiled a new financial framework through 2027 comprised of $1 billion in net sales from growth platforms, a $1 billion cost reduction and productivity benefits, and $4.5 billion in shareholder returns. Its growth platforms included seed and trait out-licensing, biologicals, new crop protection techniques, gene editing, biofuels, and hybrid wheat. Corteva will reinvest 8% of revenues into research and development, equivalent to $4 million a day.
The $3 billion stock buyback program is effective immediately and doesn’t expire. The company still has $775 million left in its $2 billion stock buyback program announced in September 2022.
