Wal-Mart's strategy: Cash tax rebate checks for free

April 30, 2008

Wal-Mart Stores Inc., the world's largest retailer, will cash tax rebate checks for free and cut prices on shampoo, cereal and groceries to encourage buying.

The discounter, which cut prices in 2007 to boost profit the most in three years, wants to extend those gains by winning sales from consumers who are starting to receive tax rebates. Kroger Co. and electronics chain RadioShack Corp. are among other retailers offering incentives.

Wal-Mart's policy is a "smart strategy" because it means some of the consumers' rebate checks will be spent at those stores, said Britt Beemer, founder of America's Research Group in Charleston, S.C.

Price cuts: Wal-Mart locations discounted prices this week and plan further reductions. Wal-Mart should see "some intermediate benefit" from rebate spending, said Virginia Genereux, a Merrill Lynch & Co. analyst.