Wal-Mart’s “Back to the Future” Strategy Works: Credit Suisse

Wal-Mart (WMT) stock has been on a huge run in recent weeks, breaking out of its previous range and repeatedly reaching new 10-year-highs. To Credit Suisse analyst Michael Exstein, much of the credit goes to Wal-Mart’s pricing and messaging strategy — in a nutshell,� Everyday Low Prices.

“[A] ‘back to the future’ strategy emphasizing EDLP savings in terms of the total basket, re-expanding the assortment, and competitor missteps has driven sales. We are encouraged that current trends can continue, especially in light of a vastly improved marketing message.

Instead of emphasizing single item price points, new television and run-of-the-press (ROP) ads clearly show savings that may be achieved by shopping at Walmart. Total basket sizes in the ads range from less than $100 to over $200 and are filmed in locations ranging from Orlando to Cleveland.”

The company could also benefit from reducing international capital expenditures, Exstein argued.

“[W]e think the hyper-competitive nature of global retailing may be easing, which could result in WMT reducing global capex (both in terms of organic square footage expansion and M&A).”