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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5 comments:
I was wondering about your thoughts on the Fed decision tomorrow. Personally, I'm feeling a lot more uncertainty about it then Wall Street is. At last check, Wall Street was figuring in an 80% chance of a full 50 bp cut. What do you see...a 50, 25, or dare I say it, 'no cut' until the emergency 75 bp cut and the coming STIMULUS work their way through the system and more data becomes available. What do you see?
Hi. Usually in the past I've run a survey on the blog and let readers vote on how much they thought they'd cut but with the 75 basis point "surprise" its thrown things off this time around. I guess it depends on how much Bernanke and gang want to place a pacifier in the mouth of the whiners on Wall Street. I think they have been way behind the curve, and while cutting rates is only going to exaggerate inflation, the financial system is so damaged they are left no options. The next Meeting is longer than usual (8 weeks instead of 6) so I'd say 25 basis points otherwise, but with those extra 2 weeks maybe they'll go 50. I find it amusing because 2 months without a Fed meeting will cause the babies to whine for intrameeting cut (sooner or later) so I think to pacify them he is going to say, here is your damn 50, now leave me alone for 3 weeks.
In the big picture it means little... 3 or 3.25 or 2.75 - it's all relative. It's a low low low rate. People should be happy. The Fed finally caught up. Now let's give it 6-12 months to work through the system. The first cuts from August will soon be having their effect. If we are at this specific rate or 25 basis higher or lower really doesn't mean much but the market is reactive and wants daddy to throw them another bone. Whatever it is, in 4 weeks there will be calls for more cuts... ;)
He should just keep moving that discount rate down and the Fed funds is good enough. But the market would cry so he can't. I'd be shocked to see zero... it seems the market runs the Fed nowadays...
Here is my vote, cut by .75 we rally 300 point plus to the resistance line, then grind out. Cut by .50, we up a little then down, but overall rally a few more days before reaching resistance, then grind out. Cut by .25 we drop 200 then rally back, but end up flat for the week. No cut, we drop and test the low this week. Overall, no sustain rally until next earning cycle, right now only the bad sector bounce when bad news come out. Until good sector get reward with good news, nothing can sustain the market.
Yes I have to agree with your last 2 sentences and I've been blogging the same thoughts esp re: MSFT. When good companies in good sectors continue to get trashed you just cannot get behind any rally. This simply appears to be a short covering rally combined with Kool Aid thinking that financials are all good again and good times of 2002-2006 are here again. Same thinking we had for 8 weeks in late Aug-Oct. Granted I lost money with Ultrashort Financial hand over fist in that move as well :) But I'm often early.
I looked through 50 charts today, and I see the same pattern in abou 48 of 50. Stocks that rebounded to 50 day moving average, and stuck. Maybe 75 basis point cut would "surprise" and be able to push all these stocks above... but at what cost to all of us?
Anyhow, let's see how strong the Kool Aid is this time around.
Mark, stuck is a temporary word, look at ISRG, BIDU, GOOG they did not stuck that long, did they? this earning season, growth stock get chopped, is it because the Nasdq try to catch up to the sp on the down side ?? and Goog, appl is heavily weighted, so they need to go down more ? i don't know. Regarding the best sector that hold up, Pot, mos or the metal like PCU, MTL, it look more to me like they are inflation type stock, look at DBA, DBC, they are in break out mode. So we have conflicting argument here, is the world economy don't link together? then these sector (or even oil can be argue as inflation type too) continue to outperform. well at least you get to 20% cash, 20% short and you can afford to wait and see. I have to congratulate you on getting there with 50 position to manage, with a lot of patient to get the best price.
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