NEW YORK - Shoppers’ focus on staples such as socks and underwear is driving murky holiday outlooks at Wal-Mart and Kohl’s, even as both posted higher third-quarter earnings yesterday.
Both signaled they plan aggressive discounting to hang on to customers and drive sales this holiday season.
Wal-Mart Stores’ price-cutting campaign is bringing more shoppers in the door. But they’re spending less when they get there since the goods are priced lower - because of deflation, especially for meat and dairy items, and discounts designed to bring people into its stores.
The price decreases at Wal-Mart helped fuel a second consecutive quarterly decline in sales at US stores open at least a year, a key measurement of a retailer’s health because it excludes the effects of expansion. The company expects sales could continue to decline through the fourth quarter.
The discounts seem to be working. Wal-Mart Stores Inc.’s profit rose 3.2 percent in the third quarter to $3.24 billion; Kohl’s profit rose 21 percent to $193 million.