As others have said, it's a good move. I personally dislike DRPs as they're a constant source of dilution as the company is in effect permanently raising equity at a time and price that is not of its choosing. To give an example of the dilutive impact of DRPs, GXL has since FY14 issued ~7.6m shares under its DRP program; given current shares outstanding of 117.8m, the DRP has effectively diluted earnings per share by about 7%. The better move would simply be to reduce the quantum of the dividend and have no DRP.
The cancellation of the DRP coupled with recent director buying and no change to earnings guidance are, i think, positive signals as to what's in store for FY17 results. I am looking forward to 2H17's results for no other reason than to see how robust this business is in difficult retail trading conditions - hitting guidance provided 12 months ago would put them in the minority of retail-focused businesses (most of whom have tended to downgrade FY17 guidance versus expectations / original guidance provided 12 months ago).
GXL Price at posting:
$5.39 Sentiment: Buy Disclosure: Held
