Reportedly, Wal-Mart Stores, Inc. (WMT - Analyst Report) has slashed the prices of Apple, Inc.’s (AAPL - Analyst Report) iPhone 5 models in its stores. Customers can now get the 16 GB iPhone 5s for $99 with a two-year contract, while the 16 GB iPhone 5c will now cost only $29 with a two-year contract.
Prices were slashed further from the already-discounted prices of $149 for 5s and $49 for 5c. In fact, to compel users to purchase iPhones from Walmart stores, it had priced 16 GB iPhone 5s for $189 and 16 GB iPhone 5c for $79 at its launch date in Sep 2013, which was still cheaper than the original price of $199 for 16 GB iPhone 5s and $99 for 16 GB iPhone 5c.
It is gradually becoming a trend to offer discounts at the beginning of the summer months on the latest iPhone models. However, this one is not a running deal. The discounted prices on the model will be permanent and will not increase with the launch of new models. Also, this deal is available only at Walmart.
There is no specific reason for slashing the prices of iPhone models. However, we believe that Walmart might look to clear its inventory of unsold handsets to make room for Apple's latest and greatest devices, as many firms expect the launch of iPhone 6 later this year. It is rumored that the iPhone 6 will have a larger screen and other improved features along with an upgraded processor and hardware.
Walmart has been struggling of late and performed disappointingly in all the four quarters of fiscal 2014 and the first quarter of fiscal 2015. The company is therefore seeking new ways to boost revenue amid macro-economic headwinds like budget-strained customers, reductions in government benefits, higher taxes, tighter credit and higher group healthcare costs.
The move to offer discounted prices on iPhone 5 models is surely going to increase traffic at its stores. Walmart currently holds a Zacks Rank #4 (Sell).
Some better-ranked retailers include Ingles Markets, Inc. (IMKTA - Snapshot Report) and Dillard's Inc. (DDS - Analyst Report) , both of them holding a Zacks Rank #2 (Buy).