Health and beauty retailer Boots plans to return £700 million sterling to shareholders in a move that will please investors but raise concerns about its ability to pay down debt.
Boots stock rose 5 per cent - the biggest gainer in the FTSE 100 index of leading shares - on news of the buyback and a small rise in year profits. The shares have fallen 12 per cent in the past six months amid raging competition from supermarkets.
But credit rating agency Standard & Poor's is worried that Boots would have less cash to pay off debt. It cut the 150-year-old store chain's rating two notches to A-.
Boots is cutting prices, extending store hours and opening new branches as it battles with supermarkets that are offering similar product ranges at low prices.
The company, whose 1,400-strong chemist chain makes most of its profits and sales, announced a 2.7 per cent rise in pre-tax profit to £544.6 million before exceptionals for the year.