Wal-Mart Says Cuts, Slower Growth to Be Positives

Wal-Mart Stores Inc.'s CEO and President Mike Duke promised investors Thursday that the retailer's aggressive price-cutting will not hurt its stock price, even as the company issued a modest forecast for U.S. expansion this year and next.

"We absolutely will have price leadership while at the same time greater shareholder value," said Mike Duke, who took the helm in February. "This is not about trading one for another. The two go hand and hand."

He continued, "We will win in the area of retailing around the world."

Duke was addressing investors on the second of two days of analyst meetings in Roger, Ark., near the company's headquarters in Bentonville, Ark. The meetings were broadcast online.

The theme resonating from the meeting was how the world's largest retailer was cutting costs and reinvesting those savings to lower prices for shoppers, which in turn drives sales. The executives said that increased revenue will in turn increase efficiencies and lower costs further.

Intent on keeping its reputation as a low-price leader, even as other chains cut prices to compete for steadfastly conservative shoppers, the retailer announced Wednesday that it will cut prices weekly on top-selling items from bananas to board games and hold those cuts through the holiday season.

Company officials expect sales in the current fiscal year, which ends Jan. 31, to be 1 percent to 2 percent higher than last fiscal year. That's down from their original estimate of 5 percent to 7 percent.

The following year, they expect sales to accelerate 4 percent to 6 percent as the company benefits from opening new stores and from easing deflation and more favorable currency exchanges.

They declined to offer any guidance for sales at stores open at least a year, a figure that is considered a key barometer of a retailer's health. In August, Wal-Mart forecast the figure would show growth anywhere from 2 percent to flat for the current quarter. The company stopped reporting the figure monthly after releasing its April numbers.