Retailer Wal-Mart to cash tax rebate checks for free, cut prices
GREENSBORO, N.C. - Wal-Mart Stores Inc., the world's largest retailer, will cash tax rebate checks for free and cut prices on shampoo, cereal, and groceries to encourage buying in its stores.
The reductions come as Americans worried about losing their jobs and record gasoline prices pushed US consumer confidence to its lowest level in five years. Wal-Mart climbed 2.1 percent in New York trading yesterday to its highest since 2004.
The discounter, which cut prices in 2007 to boost profit the most in three years, wants to extend those gains by winning sales from consumers who start getting $117 billion in tax rebate checks this week. Kroger Co., the biggest US supermarket company, and electronics chain RadioShack Corp. are among other retailers offering spending incentives.
Wal-Mart's policy is a "smart strategy" because it means some of the consumers' rebate checks will be spent at those stores, said Britt Beemer, founder of America's Research Group in Charleston, S.C. "Seventy percent of income rebate checks are going to be spent paying off debt and credit card bills."
Wal-Mart locations discounted prices this week and plan further reductions as Americans receive rebate checks, the Bentonville, Ark., company said yesterday. The retailer will also refund the purchase fee on its Wal-Mart MoneyCard when any portion of a rebate check is loaded onto the card.
Wal-Mart rose $1.26 to $58.61 in New York Stock Exchange composite trading.
Wal-Mart should see "some intermediate benefit" from rebate spending, Virginia Genereux, a Merrill Lynch & Co. analyst in New York, wrote in an April 25 report to clients.
Wal-Mart had revenue of $378.8 billion in the year through January.
Customers who cash rebate checks at Wal-Mart will probably spend them there, Jack Shewmaker, a director and retired vice chairman of the retailer, said in an April 10 interview in Barcelona.
"We will enhance our rollback program" on top of discounts planned before Congress approved the rebates, Eduardo Castro-Wright, Wal-Mart's US stores chief, told analysts yesterday at a Lehman Brothers Holdings Inc. conference in New York.
Tightening credit is sending more consumers to Wal-Mart's stores, Castro-Wright said. In particular, traffic to the retailer's stores in higher income markets is growing faster than the rest of the chain. 