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Worried Walmart Just Made Your Holidays Less Expensive


The low cost leader in retail is mad and isn't going to take it anymore. After posting its third consecutive earnings disappointment, Walmart (WMT) has let its rivals, suppliers, employees and customers know that this Christmas, the biggest retailer in the world is in it to win it.

"Our most important priority is growing top line sales, including comp sales," Walmart CEO Mike Duke said in the company's press release. "The retail environment, both in stores and online, remains competitive. Walmart has aggressive plans to help our customers enjoy the holiday season, and there is no doubt that we plan to win for our customers and shareholders throughout the holidays."

Related: Walmart Makes it Official: Thanksgiving Is Dead

The emphasis in that quote is mine, but the message is clear and to everyone.

"The consumer always benefits in those kinds of situations," says Dan Veru, the CIO at Palisade Capital Management in the attached video. "Clearly, I think Walmart is being preemptive. They're seeing trends that they don't like and they want to be in front of those trends, because the last thing you want as a retailer is unsold inventory."

For the record, the Arkansas-based discounter beat third quarter EPS estimates by a penny, thanks in parts to an aggressive and ongoing share buyback program. But their revenues and comparable store sales were both short of expectations, and the company trimmed a dime off of its fourth quarter and full year guidance.

Coming on the heels of Macy's (M) surprisingly strong quarterly results yesterday, Veru says an uptick in promotional sales activity is sure to follow.

"You wonder how factors like the Affordable Care Act are playing in to this," Veru says, adding that Macy's is a better indicator of more affluent consumers and Wal-Mart is indicating that the lower-end consumer is really struggling.

"The one thing we do know about the consumer is that they demand a deal. They want value for their money. They have limited dollars and they want them to go as far as possible," he says.

As for the stock, shares of Walmart are up about 15% year to date, lagging both the market and retailing sectors. Part of their resilience stems from the fact that they consistently pay and grow their dividend, which at 2.4% is just shy of the yield on a 10-year Treasury (^TNX).

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