logicalsinger

Wal-Mart’s Holiday Discounts: Revenue at the Expense of Earnings

Price cuts do not always result in earnings deterioration. If the additional volume from the price cuts is large enough, earnings will be ok even if profit margins fall somewhat. For a company like Wal-Mart, there are some externalities as well when shoppers, who come to the stores to buy the discounted toys, also wander off into other aisles and buy other non-discounted goods.