Wal-Mart tries again to boost same-store sales with more price cuts

Wal-Mart Stores, Inc. (NYSE:WMT) is now targeting price cutbacks on selected small home appliances for the Christmas season. Its rollbacks are on nearly 50 home appliances from brands including GE, Hoover and Sharp.

Here are some of the listed items and price cuts:
-Hoover fusion cyclonic upright vacuum (was $112/now $98)
-Mr. Coffee 12-cup programmable coffee maker (was $42.48/now $37.88) and espresso maker (was $29.86/now $24.88)
-Sharp .08 cubic foot black microwave (was $54.88/now $49.88)
-GE 1.1 cubic foot microwave (was $64.72/now $59.88)
-Black & Decker Quick 'N Easy 8-cup food processor (was $29.72/now $24.88)

Wal-Mart will continue to roll back the prices of toys, electronics, apparel and more this holiday season. While this is not as extreme as the select electronics price cuts, this is just one more initiative that the company is willing to do whatever it can from keeping those November same-store sales from being as FLAT as the company recently forecast. These cuts are not on such expensive items that they will bite into margins, and they probably got GE, Hoover, and Sharp to take some juice out, ,too.

But this is still a trend toward more and more lower-priced items that are driving margins down in an effort to keep from posting flat or negative same-store sales. It has to make you wonder that if the economy is slowing into 2007 what the monster retailer can do to keep its same-store sales higher in 2007.

It also makes you wonder now if Wal-Mart will actually endorse a higher minimum wage. If they have to get into the spiral of only worrying about same-store sales instead of raw profits, that would actually make sense. It would increase their labor costs drastically and therefore affect operating costs, but it might result in higher spending from their demographics in 2007.

Jon C. Ogg
November 10, 2006

Jon Ogg is a partner in 24/7 Wall St., LLC; he does not own securities in the companies he covers.