The Temple & Webster Group Ltd (ASX: TPW) share price is defying the market weakness and pushing higher on Thursday.
In morning trade, the online furniture retailer's shares are up 1.5% to $3.52.
However, despite this, the Temple & Webster share price remains down 40% over the last 12 months.
Why is the Temple & Webster share price rising?
Investors have been buying the company's shares after it announced a major share buyback.
According to the release, Temple & Webster is planning to return up to $30 million to shareholders via an on-market share buyback. This will commence on 3 April for a period of 12 months.
The board appears to believe recent weakness in the Temple & Webster share price means it is undervalued and that buying back shares will create value for shareholders. It explained:
The board considers the acquisition of shares at prevailing prices to be effective capital management while retaining financial flexibility to fund accretive organic and inorganic opportunities as part of its growth strategy.
The release also notes that, in accordance with listing rules, the prices paid for shares purchased under the buy-back will be no more than 5% above the volume-weighted average price of its shares over the five trading days prior to purchase.
Its buy back will also be limited to 10% of issued capital over the 12-month period, which therefore does not require shareholder approval.
Finally, management will continue to assess market conditions, its prevailing share price, available investment opportunities, and all other relevant considerations throughout the buy-back period. It reserves the right to suspend or terminate the buy-back program without notice at any time.
