I'm not convinced that the company will be able to recover its profit margins. They've been trying to cut costs for a while, but their margins keep going down, just like Manlobbi said. Check out the trend the last 6 quarters - so far a perfect straight line downwards.

If they were ignoring the problem, it would be one thing, but they've been working on it. The problem is that they seem powerless to fix it. They can't raise prices much because inflation is making sales drop, and they don't want to sell even less. They can't cut costs much either, because it could lead to more theft, and they're even talking about hiring more people, which will make the margins fall even further.

Margins could get so low that they won't make any money, and then they'll have to raise prices just to stay afloat. But that could make their sales drop for a while.

I'm not sure if Walmart is the only big competitor. There are other companies that are also trying to compete with them, especially Aldi, which is growing really fast here.

Berkshire Hathaway FAQ

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