Wal-Mart and Target show start of holiday price war


Wal-Mart Stores, Inc. (NYSE:WMT) and Target Corporation (NYSE:TGT) have started throwing punches leading up to the "official" holiday shopping season that starts on Black Friday -- the day after Thanksgiving. In quarterly results conference calls from both retailers that happened this morning, both retail behemoths came out punching and seemed smug that the public will choose them over the competition this holiday shopping season. Want to see all the nitty-gritty details? Amey Stone and myself liveblogged both results conferences this morning -- check out the Wal-Mart liveblog here and the Target liveblog here.

Both companies mentioned that toys, games and electronics were the hot holiday categories this year (as well as the most recent quarter for both), and both mentioned that they were the country's two largest discount retailers. Wal-Mart is going to use its strengths of "everyday low prices" and vowed to have "its most aggressive pricing strategy ever" to fuel year-end holiday shopping business. However, in spite of trying to move all that merchandise at rock-bottom prices, Wal-Mart warned the move could also make it miss Wall Street's expectations for fourth-quarter earnings. How's this Wal-Mart -- do you really need to lower prices that much? What's the point in holiday retail marketshare if you're going to make less profit?

I've never quite understood why some companies -- even Wal-Mart -- think that marketshare is more important that making money. Marketshare does not pay the bills, employees, satisfy shareholders (except short-sighted shareholders) or do anything else except give temporary bragging rights. I say, who cares?

Target Corp. reported a 16 percent gain in third-quarter profit, beating analyst expectations as its sales rose 11 percent. Target President Gregg Steinhafel told investors during the quarterly results conference call this morning that the retailer would compete on long-running discounts and would match Wal-Mart move-for-move -- noting that it has often matched Wal-Mart pricing before Wal-Mart advertises them in its circulars.

The game is on...

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