Tuesday, January 29, 2008

Fascinating Move by Walmart (WMT) - Continuing "Pooring of America" Scenario

I thought Fed cuts fixed all these ills? Hmm....

Walmart Chops Prices in Bid to Lure Shoppers
  • Wal-Mart announced Tuesday that it will chop prices between 10 to 30% this week on groceries, electronics and other home-related products in an effort to keep its cash-strapped consumers excited about shopping.
  • While its rivals, including Target (TGT, Fortune 500), have seen sales decelerate dramatically in recent weeks from a consumer spending slowdown, Wal-Mart (WMT, Fortune 500) has been benefiting from more shoppers trading down to its discount stores.
  • The world's largest retailer recently reported that its December same-store sales rose 2.4%, which was at the high-end of its expectations for the month.
  • However, one retail analyst said the timing of the price cut, coming just ahead of the Super Bowl weekend, is a clever marketing move by Wal-Mart.
  • Wal-Mart spokeswoman Melissa O'Brien told CNNMoney.com that this month's week-long additional price cuts are "the first of more to come." "We will have more of these during the busier shopping periods of the year like Valentine's Day and Easter," O'Brien said.
  • In addition to the extra discounts on "thousands of products," the retailer said it will offer no interest for 18 months on purchases of $250 or more with a Wal-Mart Credit Card.

Very interesting. Very. I continue to eye Walmart (WMT) as a potential inclusion to the fund. While its not a typical holding, if the recession is farther and deeper than currently is consensus (and keep in mind, consensus 2 months ago was there will be no real slowdown), than this is an obvious beneficiary. Unfortunately moves like this, while driving traffic in, do hurt profits. But it is simply fascinating in a macro economic lense...

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