Shares in home improvement store Lowe’s Companies, Inc. (NYSE: LOW) were trading higher by around 3% in the pre-market this morning on news that the company will initiate a $5 billion stock repurchase plan. The company noted that the new program has no expiration date, but that it expects to spend the full $5 billion “over the next two or three years.” Lowe’s buyback plan could be too little, too late, given what other big box stores have recently announced.

Home Depot Inc. (NYSE: HD), Wal-Mart Stores Inc. (NYSE: WMT), Target Corp. (NYSE: TGT), Costco Wholesale Corp. (NASDAQ: COST), and Best Buy Co. (NYSE: BBY) have all announced big share buyback plans as these companies — and many others — try to figure out what to do with the enormous piles of cash that are sitting on their balance sheets. Remember last month, when Apple Inc. (NASDAQ: AAPL) reported that it had more than $76 billion in cash — more than the US Treasury’s operating balance of just under $74 billion.

Share buybacks have never been a favorite with us. For one thing, it shows a real lack of imagination on the part of a company’s management. For another, a buyback is self-serving for senior managers who often hold large chunks of stock and options. Of far more benefit to shareholders would be a special cash dividend, but that happens so rarely as to be virtually unheard of.

Home Depot announced in late March that it would accelerate its repurchase of $1 billion in stock from an already-authorized $2.5 billion buyback plan. Walmart is buying back $15 billion in its shares in a move that will likely put control of the world’s largest retailer back into the hands of the Walton family.

Target announced in January that it would resume its 2007 $10 billion repurchase plan that had been mostly suspended in 2008. Through the third quarter of 2009, Target had spent about half the money it had committed to the buyback plan and now plans to spend the rest in two or three more years.

Costco announced a $4 billion buyback program in April, and boosted its quarterly dividend by about 17%, from $0.205/share to $0.24/share. The plan expires in 2015 and replaced an earlier buyback plan that still had about $800 million in remaining authorized funds.

Best Buy announced a $5 billion buyback plan in June to replace a plan that had been in place since 2007. The company also raised its quarterly dividend by 7%, to $0.16/share.

Using corporate cash to expand at a time when the economy barely has a pulse doesn’t make a lot of sense to most of us. And that is the situation that these retailers find themselves in. It is not their job, nor is it their shareholders’ job, to stimulate the economy. Expansion and hiring will respond to customer demand, and there’s not been a lot of that lately either, except in response to dramatic price markdowns.

Lowe’s share buyback plan may help it keep its stock price from dropping, but it won’t do anything to lift the shares from the roughly -23% price drop since the beginning of 2011.

Paul Ausick

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