Wal-Mart Wears Red on Price Cuts

NEW YORK (TheStreet) -- The holiday pricing war is taking a toll on retailers, as Wal-Mart's(WMT Quote) announcement that it will be lowering prices on more of its holiday merchandise sent shares in the company -- and the sector at large -- tumbling.

The discounter said during its annual meeting on Wednesday that it will cut prices this holiday season each week on thousands of items, including flat-panel televisions. The first round of cuts will start today.

"We will not be beaten on price," said Eduardo Castro-Wright, vice chairman and leader of its U.S. business, as the company embarks on its two-day annual meeting.

Wal-Mart has already significantly slashed prices on toys and books for the holiday season. It is being closely tailed by rivals like Amazon.com(AMZN Quote) and Target(TGT Quote), which have been matching nearly every move Wal-Mart makes.

While Wal-Mart was rolling back prices long before the recession began; investors fear these massive promotions will eventually cut into margins. And then, of course, there is the generalized fear of what a Wal-Mart-led price war could mean to the retail sector at large.

Shares of the company ended the day down 2% to $50.63. Meanwhile, the S&P Retail Index was mirroring the company, falling by 1.9% on the heels of the announcement.

-- Reported by Jeanine Poggi in New York

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