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AC/DC Exclusive Sparks Wal-Mart

13 Nov, 2008 By: Erik Gruenwedel

Wal-Mart Stores’ exclusive music video release of AC/DC’s No Bull: The Director’s Cut on DVD and Blu-ray helped drive consumer traffic across multiple product categories and positively impacted the bottom line, company officials said in a financial call.

With a strategic goal to grow its entertainment properties, Wal-Mart leveraged the hard rock act’s first studio album since 2000 to drive sales in young men’s apparel and video games.

The Bentonville, Ark.-based retail behemoth, which has released exclusive packaged media from Garth Brooks, the Eagles and Journey, shrewdly chose AC/DC — reportedly one of the few major music acts yet to make its content available on Apple’s iTunes Music Store.

“The result was great sales for both the music and apparel areas,” said Eduardo Castro-Wright, president and CEO of Wal-Mart U.S.

The retailer, citing a 23% drop in CD sales during the first four weeks of the fourth quarter, continues to scale back inventories of CDs; supplanting it with electronics and movies.

Already responsible for 40% of domestic DVD sellthrough, Wal-Mart is expanding Blu-ray software and hardware selections heading into the holidays, including selling the Magnavox NB500MG9 Blu-ray player for $198. Expect to see that price fall further.

“You will see a number of entertainment products featured in our Black Friday events,” Castro-Wright said.

Bucking industry trends, Wal-Mart reported third-quarter (ended Oct. 31) operating income of $4.2 billion, up 7.3% from $3.9 billion during the prior-year period.

Same-store (open at least 12 months) sales increased 2.7%, from a 1% rise last year. Consolidated revenue (including Sam’s Club and international) topped $98.6 billion from $91.8 billion, with net income of $3.1 billion versus income of $2.8 billion last year.

“Unlike some retailers that are reacting to a slower consumer environment currently, Wal-Mart has planned well for this and is controlling inventory better in recent quarters,” Daniel Binder, analyst with Jeffries & Co., said in a research note.

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