Store Sales Down, Wal-Mart Cuts Prices On 10,000 Items

247wallst — Fri, 09 Apr 2010 10:00:36 +0000

It is a time-honored tradition within the retail industry. When sales drop, so do prices. Of course, not all retailers can afford that. As the holiday season in 2008 showed, many stores simply close their doors and lay off workers. The economy is still bad enough that the practice has continued through 2009 into 2010.

Wal-Mart’s (WMT) US same store sales have been weak, and the firm means to change that.

According to The Wall Street Journal, the world’s largest retailer will cut prices on about 1o,000 products over the next week. The paper says that the reductions will be ”mostly food and other staples.” If the process works, watch Wal-Mart accelerate the process by expanding it into a greater number of items.

Wal-Mart’s domestic sales have dropped about 2% during the last year at stores open over 12 months. Now analysts wonder if customers who went “down market” during the recession will go back to mid-tier retailers.

Wal-Mart has the balance sheet to drop prices and hold them down indefinitely. It keeps $7 billion of cash on hand. But the problem that the company and its investors face is that Wal-Mart already operates on very low margins. In its last fiscal year, its operating income was only $23 billion on $408 billion in revenue.

Wal-Mart may retain some of the customers it picked up during the economic downturn. New low prices may get some customers to buy a greater number of items while they are in Wal-Mart stores. But, there will be hell to pay on Wall St. if the discounts turn EPS numbers sour.

Douglas A. McIntyre

Filed under: Retail Tagged: EPS, WMT

Pre-Market Earnings Gappers (January 29, 2008)

247wallst — Tue, 29 Jan 2008 08:22:52 +0000

We are right in the thick of earnings season and below is a snapshot of some of the key earnings reports with price changes if available:

Air Tran (NYSE: AAI) -$0.02 EPS vs -$0.02 estimate.
American Electric Power (NYSE: AEP) $0.52 EPS vs $0.50 estimate.
American Express (NYSE: AXP) $0.71 EPS vs $0.71 estimate; stock fell 2% after-hours.
Burlington Northern (NYSE: BNI) $1.46 EPS vs $1.37 estimate.
Cardinal Health (NYSE: CAH) $0.90 EPS vs. $0.87 estimate, lowered guidance.
Chattem (NASDAQ: CHTT) $0.76 EPS vs $0.65 estimate.
Corinthian Colleges (NASDAQ: COCO) $0.11 EPS vs. $0.11 estimate; lending changes and reimbursement changes will lower earnings in second half to make 2008 at lower-end of expectations.
Countrywide Financial (NYSE: CFC) posted earnings; maintained dividend; shares up 1.5% pre-market.
Dow Chemical (NYSE: DOW) $0.84 EPS vs $0.80 estimate;
Eli Lilly (NYSE: LLY) $0.90 EPS vs $0.87 estimate.
EMC (NYSE: EMC) $0.24 EPS vs $0.22 estimate
3M (NYSE: MMM) $1.19 EPS vs $1.17 estimate; $6.2 Billion vs. $6.12B estimate; reiterated 10% EPS growth for 2008.
Accidental Petroleum (NYSE: OXY) $1.74 EPS vs $1.69 estimate; replaced 116% of its 2007 production.
SanDisk (NASDAQ: SNDK) posted non-GAAP EPS of $0.69 vs. $0.64 EPS estimate, but guidance was disappointing; stock down 3%.
Sepracor (NASDAQ: SEPR) trading down 7% after restatements.
Smurfit Stone (NASDAQ: SSCC) traded up 6% after earnings.
T.Rowe Price (NASDAQ: TROW) $0.68 EPS vs $0.63 estimate.
Unisys (NYSE: UIS) $0.04 EPS vs $0.12 estimate; although shares up almost 4%.
VMware (NYSE: VMW) trading down 20% or more after revenue number was light.
Waddell & Reed (NYSE: WDR) $0.42 EPS vs. $0.42 estimate.
Zoran (NASDAQ: ZRAN) traded down 22% after beating earnings but lowering guidance.

Jon C. Ogg
January 29, 2008

24/7 Wall St. » EPS

Store Sales Down, Wal-Mart Cuts Prices On 10,000 Items

Pre-Market Earnings Gappers (January 29, 2008)