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Wal-Mart Wins Big During Downturn

The retailer was reeling from overexpansion and tough competition. Now it's stressing bargains and pulling in crowds

These are heady times for Wal-Mart (WMT). The Bentonville (Ark.) retailer has been enjoying double-digit profit growth and strong sales as bargain hunters crowd its aisles. Its stock is up about 20% since the start of the year. And shoppers like Sal Garcia of Downey, Calif., are joining the growing ranks of loyal customers. "Look," says Garcia, 52, putting the last of 10 shopping bags into the trunk of his Lexus, "all that for $54!"

Wal-Mart's turn in fortunes has as much to do with a shift in strategy as with the economic downturn. After years of stuffing a wider array of products into stores to broaden its appeal, the $375 billion mass merchant is simplifying its look and drilling down prices of its most popular products. "You'd swear the only reason they're having any success is the economy and customers trading down," says analyst Daniel T. Binder of Jefferies & Co. "But the company has done a lot to help the consumer make that decision."