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Wal-Mart, Kohl’s plan aggressive discounting

Shoppers are focusing on such staples as socks and underwear as the holiday market begins, retailers say. Shoppers are focusing on such staples as socks and underwear as the holiday market begins, retailers say.
(Richard Clement/Reuters
)
By Anne D’Innocenzio
Associated Press / November 13, 2009

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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.