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‘I’m a believer in my company’: Lowe’s CEO sticks to stock buyback plans
Marvin EllisonJim Spellman | WireImage | Getty ImagesLowe’s is sticking by its repurchase program as stock buybacks emerge as a hot topic during the coronavirus outbreak.”I’m a believer in my company,” CEO Marvin Ellison told CNBC’s Jim Cramer Wednesday. “I’m here for the long term.”Lowe’s said in its January quarter report that it repurchased $670…
Marvin Ellison
Jim Spellman | WireImage | Getty Images
Lowe's is sticking by its repurchase program as stock buybacks emerge as a hot topic during the coronavirus outbreak.
“I'm a believer in my company,” CEO Marvin Ellison told CNBC's Jim Cramer Wednesday. “I'm here for the long term.”
Lowe's said in its January quarter report that it repurchased $670 million of stock under its buyback program. The home improvement retailer authorized a $10 billion stock buyback for the fiscal 2019 year.
The company plans to repurchase about $5 billion of stock in the current fiscal year. Stock buybacks decrease the amount of company shares trading publicly, which often leads to higher stock prices.
“We think that we will create a great value and we'll create a great opportunity for shareholder value over the long term,” Ellison said in the “Mad Money” interview. “And, as CEO, if I don't have confidence in the company, then I don't know who will.”
Ellison's comments come after corporate buybacks became abuzz on Wall Street, and soon after on Capitol Hill, in the face of an economic struggle with the coronavirus pandemic. The pandemic is having a significant impact on various industries, particularly on airline, cruise line and hotel businesses who are looking for government assistance to weather the crisis.
While they are not believed to be seeking government aid, McDonald's and major banks such as J.P. Morgan and Citigroup to suspend their buyback plans due to the pandemic.
Billionaire internet entrepreneur Mark Cuban last week said any corporations receiving bailouts from the federal government should be banned from buybacks.
“No buybacks. Not now. Not a year from now. Not 20 years from now. Not ever,” he told CNBC. “Because effectively you're spending taxpayer money to buyback stock and to me that's just the wrong way to do that.”
Later, President Donald Trump signaled that he would be “okay” with restricting companies receiving federal assistance from repurchasing shares, all while lawmakers were putting together a massive stimulus package.
In the $2 trillion package that the Senate presented on Wednesday, the legislation fell well short of Cuban's wishes. The bill calls for an end of stock buybacks, as well as dividends payouts, for one year after bailout money is paid back to the government.
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