Wal-Mart (WMT) Starts Early-Season Discounts Ahead of Holiday Softness

Tickers in this article: WMT

NEW YORK ( TheStreet) -- Wal-Mart , beating other retailers to the punch, has initiated discounting across its stores in a bid to entice holiday shoppers. The retailer is set to discount products across its merchandise on Friday, significantly earlier than usual Thanksgiving sales at the end of November.

The move will partially mitigate losses during a shorter-than-usual holiday shopping period. Thanksgiving, falling on Nov. 28 this year, will mean six fewer days between the unofficial start of the holidays and Christmas. Morgan Stanley analyst Kimberly Greenberger predicts this year's holiday season will generate 1.6% gain in same-store sales for retailers, the worst since 2008.

Beginning Friday, Wal-Mart will offer discounts across categories ranging from electronics to apparel. An 8-inch Nextbook tablet, for example, will cost $99 through Wal-Mart. Purchasing the tablet elsewhere will cost upwards of $139.

"We know that our customers start shopping for the holidays on Nov. 1 because historically our traffic spikes the day after Halloween," said CEO of Wal-Mart.com Joel Anderson in a statement. "We are helping them make the most of their time and helping them stretch their dollars further."

Separately, the company has commissioned three new U.S. manufacturing projects as part of its 'Made in the USA' initiative, a promise to purchase $50 billion more domestically-made products by 2023. The three suppliers Wal-Mart partnered with will produce footwear, curtains and glassware.

"Since Wal-Mart announced its commitment earlier this year to buy an additional $50 billion in U.S.-made products over the next 10 years, manufacturers have committed to investments in the U.S. that will create more than 1,600 jobs," said Secretary of Commerce Penny Pritzker at an investment summit on Thursday.

TheStreet Ratings team rates Wal-Mart Stores Inc as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:

"We rate Wal-Mart Stores Inc (WMT) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, good cash flow from operations, growth in earnings per share and increase in net income. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • WMT's revenue growth has slightly outpaced the industry average of 2.5%. Since the same quarter one year prior, revenues slightly increased by 2.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Wal-Mart Stores Inc has improved earnings per share by 5.1% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, Wal-Mart Stores Inc increased its bottom line by earning $5.02 a share vs. $4.55 a share in the prior year. This year, the market expects an improvement in earnings ($5.20 vs. $5.02).
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Food & Staples Retailing industry and the overall market, Wal-Mart Stores Inc's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
  • Net operating cash flow has slightly increased to $6,357 million or 3.18% when compared to the same quarter last year. In addition, Wal-Mart Stores Inc has also modestly surpassed the industry average cash flow growth rate of -3.41%.
  • The net income growth from the same quarter one year ago has exceeded that of the Food & Staples Retailing industry average, but is less than that of the S&P 500. The net income increased by 1.3% when compared to the same quarter one year prior, going from $4,016 million to $4,069 million.
  • You can view the full analysis from the report here: WMT Ratings Report