Is price matching good business or does it signal vulnerability?

By Robbie Citrino for Kapitall.

Staples (SPLS) has become the most recent retailer to institute price-matching in a bid to lure shoppers in for back-to-school shopping. Facing declining revenues over the past four years the office supplies retailer is using this margin-cutting tactic to win over potential customers.

But is price matching a sign of vulnerability? On one hand it seems good business sense to sacrifice margins for customers. But history tells a more complicated story.

In 2011  J. C. Penney (JCP) instituted a price-matching policy when Apple (AAPL) executive Ron Johnson joined the board. Since this change, the company has lost almost 74% of its market capitalization.

Sears (SHLD) is another struggling retailer facing competition from Amazon that brought price-matching to its stores in 2011. At the time the move was aimed at people coming in to look at items they intended to purchase online.

The company has since posted losses per share in every quarter, and their stock has dropped about 60%. This all happened despite the fact that the market rose during the period.

Countless others have fallen to online retail despite their price-matching efforts. Will Staples be a different story? Use the list below to begin your analysis and let us know what you think in the comments. 

Click on the interactive chart to view data over time. 

 

 

1. Amazon.com Inc. ( AMZN, Earnings, Analysts, Financials): Operates as an online retailer in North America and internationally. Market cap at $149.19B, most recent closing price at $324.20. 

 

 

2. Staples, Inc. ( SPLS, Earnings, Analysts, Financials): Operates as an office products company. Market cap at $7.24B, most recent closing price at $11.19. 

 

 

3. J. C. Penney Company, Inc. ( JCP, Earnings, Analysts, Financials): J. C. Penney Company, Inc., through its subsidiary, J. C. Penney Corporation, Inc., operates department stores in the United States and Puerto Rico. Market cap at $2.74B, most recent closing price at $9.00. 

 

 

4. Apple Inc. ( AAPL, Earnings, Analysts, Financials): Designs, manufactures, and markets personal computers, mobile communication and media devices, and portable digital music players, as well as sells related software, services, peripherals, networking solutions, and third-party digital content and applications worldwide. Market cap at $548.16B, most recent closing price at $90.91. 

 

 

5. Sears Holdings Corporation ( SHLD, Earnings, Analysts, Financials): Operates as a retailer in the United States and Canada. Market cap at $4.37B, most recent closing price at $41.02. 

 

 

(List compiled by Robbie Citrino. Monthly returns sourced from Zacks Investment Research, all other data sourced from Finviz.)

Kapitall Wire is a division of New Kapitall Holdings, LLC. Kapitall Generation, LLC is a wholly owned subsidiary of New Kapitall Holdings, LLC. Kapitall Wire offers free investing ideas, intended for educational information purposes only. It should not be construed as an offer to buy or sell securities, or any other product or service provided by New Kapitall Holdings, LLC, and its affiliate companies.

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