Wal-Mart to increase grocery promotions over next six weeks

Bentonville, Ark. Wal-Mart Stores will dramatically increase its promotions over the next six weeks, according to a report by Reuters.

A Morgan Stanley analyst said Friday that the promotional surge is a major setback for U.S. grocers.

"While this helps address Walmart's traffic woes, we view this as a major setback for the grocery stocks, which have been rallying on hopes of a return to more rational pricing," Morgan Stanley analyst Mark Wiltamuth wrote in a note.

Wiltamuth said the information on the promotions came from chief merchandising officer John Fleming during a store tour and presentation. 

Reuters said Wal-Mart could not be reached for confirmation.

Wal-Mart has used aggressive pricing in grocery and other units to bring shoppers into its stores. Investors have been concerned about signs that shoppers who gravitated to Wal-Mart during the worst of the recession are returning to rivals. Wal-Mart's traffic fell in its U.S. stores during its fourth quarter, despite the holiday season when shopping is at its peak.

Wiltamuth wrote that Wal-Mart management said customers entering stores would be greeted by signs advertising price rollbacks on 10,000 items. The focus of the price cuts will be on food and other consumables, the analyst said.

The changes, to hit stores by April 1, will be supported by a television and media campaign, he said.