Wal-Mart's Price Cut Strategy Boosts Gains Amid Weak Economy

June 6, 2008 2:13 p.m. EST

Fayetteville, AR (AHN) - Wal-Mart Stores Inc. on Friday said its revenue increased at its stores after the world's largest retailer cut down on prices.

With the low prices and the expansion of its $4 generic drug program, Wal-Mart's stores have gained even during a challenging economic phase.

The Wal-Mart's CFO indicated on Friday that the firm's capital spending during this fiscal year is likely to be lower by $15.2 billion, which could be re-used by the company for other business investments.

"We made price matter," Eduardo Castro-Wright, chief executive officer of Wal-Mart's U.S. stores division, told shareholders in a statement at the company's annual meeting in Fayetteville, Ark.

"At times like now, when the average American is struggling with the cost of everyday needs, price matters."

Over the past 12 months, the company's stocks have gained by as much as 20 percent.

For the year ended Jan. 31, Wal-Mart posted a 5.8 percent increase in profits and an 8.6 percent gain in sales, which was worth $374.53 billion of sales.

On Thursday, Wal-Mart reported that its sales at stores open at least a year rose 3.9 percent for the month of May, which is faster than it predicted. Including gasoline, Wal-Mart's gains were up by 4.4 percent.

The market analysts surveyed by Thomson Financial had projected the sales of the retailer to rise by just 1.6 percent.

The retailer said most of its better-than-expected same-store sales were led by lower prices on groceries, medicines and laptop computers.

The sales were boosted by the government stimulus tax rebates, pushing up the customers spending as they looked for cheaper products amid rising fuel prices, declining jobs and slumping housing market.

Shares of the firm were recently decreasing by $1.02, or 1.7 percent, at $58.78, pulled down by the overall negative sentiment in the market on Friday.