“Walmart sports the highest price (and by a wide margin) on this item out of the companies we survey in Houston,” Wolfe noted. The observation follows a similar note from the firm saying that a recent dispute between Walmart and Campbell’s resulted in higher prices for its Chunky Soup when compared to its competitors.
“Walmart appears to have extracted significant benefits from its suppliers over the last 12-18 months, enabling the company to lower pricing without much gross margin impact while also seeing significant working capital gains,” Wolfe found.
But, recent increased prices, the firm explained, could be indicative of food brands beginning to retreat from Walmart and sell their products on rival shelves including Kroger , effectively testing Walmart’s pledge to keep prices low.
“With the deep discounters also challenging Walmart on price, and with Amazon (among others) relentlessly attacking the consumables marketplace, we believe that Walmart’s commitment to its strategy is being tested,” the analysts wrote.