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GameStop repurchases $500m in stock and debt

US-based specialist retailer continues plan to "increase total shareholder return"

US-based specialist retailer GameStop has revealed a $500 million repurchase plan, which will be used to buy back shares to the tune of $300 million and pay off debt in the form of notes for £200 million.

The company has made the move in a bid to please shareholders by offering them a better return on investment in the longer term - and it's in addition to the $300 million stock repurchase plan announced in January this year.

"We are pleased that the board authorised this additional buyback in 2010 as the next phase in our long-term plan to increase total shareholder return," said CEO J Paul Raines. "We have confidence in the business to continue delivering consistent cash flow, which gives us the ability to invest in our core business, digital initiatives and enhance shareholder value."

Lazard Capital senior analyst Colin Sebastian welcome the news, and looked ahead to a resulting EPS improvement of around 10 per cent - although the timing of that is still unclear.

"We view this positively, especially as it follows the completion of the prior stock repurchase programme, which was concluded as of fiscal Q2," he wrote in a note to investors. "We expect positive operating cash flows this quarter; however, prioritising the debt versus stock repurchase will impact the timing of the expected EPS improvement."

He maintained his Buy rating on the retailer along with the $26 price target. GameStop's share price closed yesterday down a touch at $18.59, but after hours trading saw it jump on this news by 3.5 per cent to $19.24.

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