McDonald’s (MCD) did so well with its dollar menu that Wal-Mart (WMT) decided it will have one, too. The difference is that the Wal-Mart version will be merchandise and not food.
The world’s largest retailer is hoping to jack up Q2 sales by offering shoppers irresistible bargains. Wal-Mart reported flat earnings for Q1 at $.77 and said it expected to deliver a range of $.83 to $.88 in the current period. Same-store sales are expected to be between flat and up 3%.
Having a strong second quarter may be an uphill fight. Recent employment numbers and shrinking access to credit will hurt retail sales, although Wal-Mart probably has its share of people who pay cash.
According to Reuters, “Treasurer Charles Holley said Wal-Mart has planned a number of merchandising initiatives to appeal to cash-strapped shoppers, including its dollar program.”
The theory behind the promotion is sound. Most stores could not bring in a lot of revenue selling items for $1 a piece, nor could most restaurants, but Wal-Mart and McDonald’s have such significant scale and customer bases that getting an even slight increase in discretionary spending could make the difference between a mediocre quarter and a good one.
Douglas A. McIntyre
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