Mighty Wal-Mart Lays a Deflation Egg

Lower food prices contributed to a slight revenue shortfall for Wal-Mart in the fiscal third quarter.

The giant company's revenue did inch higher to $118.2 billion, but that was less than the $118.69 Wall Street expected.

An Edward Jones analyst says, "Deflation is definitely an issue for Wal-Mart."

Read this excerpt from a Nov. 17 New York Post article:

Walmart laid an egg on Nov. 17 — a big, fat cheap ol’ egg.

The discount retailer lost about $7 billion in value — or 3.4 percent off its share price — after just missing Wall Street’s forecast for revenue in the third quarter, a shortfall executives blamed on food deflation.

That’s right, cheap eggs, milk and other products tripped up the mighty Walmart, the company said. …

Some industry experts had even suggested earlier in the year that Walmart might be the cause of lower food prices as other retailers tried to keep pace with its cuts over the past six months.

Milk prices, for example, are about 10 percent lower, while egg prices have fallen by 50 percent this year. Beef prices have moo-ved to a four-year low.

Walmart’s grocery prices used to be discounted by 15 percent and are now just 3 percent to 7 percent lower than its competitors.

Food deflation cost Walmart 150 basis points in sales, the company said.

You can read the entire article by following the link below:

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