The cash return is being financed by existing resources and a£116 million senior debt facility. The group said it was able to offer the payout after a review of the company's financing requirements revealed a strong balance sheet and good cash flow.
Chief executive Nick Ounstead said: 'The business generates a lot more cash than is needed to fund the store openings and refurbishment programme. It is a more efficient use of cash for it to be paid back to shareholders, than remain on the balance sheet.'
The£116 million loan will also be financed by revenues generated by the business across the next five years.
The announcement came alongside a third-quarter trading update, when the group revealed like-for-like revenues had improved significantly on the first half of the financial year.
Like-for-like revenues were flat across the 13 weeks to July 1, compared with -4 per cent in the first half. They are down 2.4 per cent for the year to date.
However, the second-half improvements come against much easier comparatives of -3 per cent.
Ounstead said: 'Customers are spending the same, but the number of customers is falling. It's a footfall issue. These results include June and the World Cup period as well. Without the World Cup, the results would have been more positive.'
The group said it was continuing to improve market share and was confident of further improvements in its margins going forward. New warehouses have allowed the company to import more goods directly and it has re-sourced products to lower-cost producers. The retailer is also experiencing volume gains while it grows.
Its store opening programme remains on track - 18 branches were opened by the end of the third quarter, with six more due to open before the end of the year.