As long as Wal-Mart Storescan keep drawing customers in with low prices while cutting expenses in other areas it is worth holding for the long term, Morgan Keegan retail analyst John Lawrence told CNBC Tuesday.
While disappointed the company reported earnings that missed analyst expectations, Lawrence said he was still “quite pleased” by what he saw. Wal-Mart shares fell on the earnings report, and Lawrence admitted there were “a couple of things” that might drive others to take some profits now.
However, he sees the company “bringing people back into the stores” after two years of lower sales, and sales up throughout the chain with the exception of apparel.
Lawrence is also not disturbed by Wal-Mart’s conservative guidance, saying the guidance was conservative “when sales were weak, and they’re not going to change that guidance. They’re running the company for the long term.”
He said the company can compensate for the lower margins by keeping prices down through managing expenses “in things you don’t think of,” such as labor and productivity.
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Neither John Lawrence nor his company own Wal-Mart shares.