Wal-Mart Now Targeting Food Prices To Keep Up Sales

by Jon C. Ogg
November 21, 2006

Wal-Mart (WMT) is keeping its promise of cost cutting on select items.  Today it has announced that now it will trim many select food price items.  This is in the shadow of recent price cuts on select consumer products, home electronics, plasma HDTV’s, toys, and the like.

Below is a partial list of price cuts on the hundreds of food items effective through the holiday season:

— Pilgrims Pride®/Tyson(TM)/ Perdue® Fresh Fryer Boneless Skinless Chicken Breast*, 26.4 oz. pack (was $5.35/now $4.74 – was $3.34 per lb./now $2.87 per lb.)
— Louis Rich® Chicken Breast Strips, 6 oz. (was $2.87-3.27/now $2.50)
— Smithfield(TM) St. Louis Ribs with Barbecue Sauce**, 39 oz. pkg. (was $11.45/now $9.98 – was $4.70 per lb/ now $4.09 per lb)
— Select Hillshire Farm Lit’l Smokies® Assortment, 14-16 oz. (was $3.28 to 3.38/now 2 for $5.00)
— Stove Top® Stuffing, 6 oz. (was $1.44-1.74/now $0.88)
— Ocean Spray® Cranberry Sauce, 16 oz. can (was $1.14-1.36/now $0.88)
— Betty Crocker® Potato Assortment, 7.2 oz. (was $1.23-1.43/now $.98)
— Daisy® Sour Cream, 16 oz. (was $1.74/now $1.50)
— General Mills Chex® Cereal, 15.6-16 oz. (were $2.78 each/now 3 boxes for $7.00)
— Planters® Deluxe Mixed Nuts or Whole Cashews, 21-oz. can (was $6.94/now $5.97)
— Keebler® Town House® Toppers Cracker Assortment, 13.5 oz. (was $2.50/now $2.00)
— 7 UP®, 2 liter bottle (was $1.08/now $0.77)
— Hershey’s® Giant Chocolate Bar Assortment (was $1.64/now $1.25)

Food is generally considered alow margin sector already, and if you don’t believe it is true then be sure to ask a grocer that is not Whole Foods or one of the other higher-end stores.  Wal-Mart is showing more and more evidence that it is willing to sacrifice that bottom line and margin rates to keep its same-store-sales from being flat.  This is still going to set a difficult bar for 2007 if this continues.

Besides the obvious answer being EVERYTHING, it makes you wonder what they’ll cut next.

WMT shares are basically flat today.  WMT is trading up $0.05 at $47.77; its 52-week trading range is $42.31 to $52.15.