Wal Mart
Buy, sell or hold: for a defensive stocks, Wal-Mart plays a large Offense
In an appearance on NBC's "Meet the Press" on Sunday,
Wal-Mart Stores Inc.). (NYSE: WMT Chief Executive Officer H. Lee Scott Jr. said the recession habits Changing consumer buying.
What Scott did not say that Wal-Mart is perfectly positioned to benefit from these changes.
"The number one problem today is [consumer] concerns about their jobs," Scott said during the nationally televised interview. And because of that concern, Scott said, some consumers the following changes:
- Discounter in the pharmacy group, we increases in prescription drugs but not at the same rate it was. What we see is an increase in self-treatment. "
- Cash-strapped shoppers are making different food choices, which means that Wal-Mart is "seeing an increase in the storage of food when people are cooking more at home." Consumers' using remnants of more extensive, "and buying more frozen food.
- Even owners of small businesses are changing their buying habits better manage their cash flow, by shopping more often, but by buying less than usual at each visit, Scott said. For example, restaurant owners often stop and buy a day supplies at a time, which stretches from the cash flow and reduces spoilage.
At a time when the U.S. retail sector is in the grip of its worst stretch in decades, Wal-Mart is one retailer that investors want to own. The world's largest retailer, Wal-Mart last month reported a 10% jump in the third quarter earnings per share. The company's sales jumped 10%.
This performance is a large part of the investment case for Wal-Mart: Here we are one year in a recession, and Wal-Mart, a retailer, is placing a double-digit gains in profits and a healthy single-digit sales growth.
This apparently counter-intuitive development is actually a typical phenomena reserved for leaders who also enjoy cost leadership in their industry.
Let me explain.
In any industry – especially one where a company had to be easily replaced by that of a competitor (which is very true for retail) – The key to survival is to have a cost advantage over the competition. As demand falters, the low cost player is able to undercut its competitors, attracting additional traffic, market share and thrive, while weaker players get squeezed right out of the company.
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In the retail sector, it is to play as a Harvard Business School case study. For November, comparable-store sales from Wal-Mart rose 3.4%, while most of its competitors actually saw sales decline. Even consumer products king Procter & Gamble Co. (NYSE: PG) is showing that its sales through Wal-Mart is increasing, while sales through other retailers fell.
unsurpassed power of Wal-Mart to buy in large quantities makes it possible to obtain highly favorable pricing of its suppliers. If the suppliers want to deal with Wal-Mart, they must agree to the wafer-thin margins of the retailer offer them. Any supplier who even thinks balking need just remember what happened to Rubbermaid Inc.
Back in the early 1990s, in what is now considered a classic example of market power Wal-Mart was able to gather, consumer products giant Rubbermaid Inc. found that rising oil prices were forced to cover the cost of the ingot-like plastic balls, which served as raw material for the ubiquitous plastic storage containers. After what was the standard industry procedure, Rubbermaid tried to give the cost increase for Wal-Mart in the form higher product prices.
But Wal-Mart, known for its "falling prices" philosophy, not only balked – it fought back. It is not only refused to pay higher prices, the ordered Rubbermaid ways to cut the prices of commodities to find – even in the face of soaring commodity prices.
If denied Rubbermaid, Wal-Mart drastically the amount of shelf space dedicated to the Rubbermaid products, and gave space to a little-known, privately held company called Sterilite Corp., that life began as a maker of plastic shoe heels that was sad tendency to melt. So Sterilite switched to making plastic containers for the home.
Rubbermaid never recovered, and in 1999 was forced to merge with Newell Rubbermaid Inc. Newell shape Inc. (NYSE: NWL). Rubbermaid remains the No. 1 manufacturer of plastic containers. But after almost come from nowhere, Sterilite is now No. 2.
So besides the fact that the "channel commander" – with an opportunity to determine conditions and prices to suppliers – Wal-Mart very lean cost structure and high efficiency are highly optimized logistical operation allows a minimum reduce corporate fat like no other and translating these savings in the low prices for its customers. Wal-Mart with advanced integrated sourcing and distribution, compete on cost across the board against them is simply not possible for one of its competitors.
And consumers know.
If Wal-Mart CEO Scott noted in his "Meet the Press" interview, even with gasoline prices down, consumers are hunkering down. With unemployment already at 6.7% – and rising fast – the growing ranks of the unemployed and surplus either already drastically their expenditures. And even those who have jobs are worried – and act accordingly.
The drop in house prices and the bowels of the savings and retirement products brought on by a bear market that evaporated some six trillion U.S. dollars in shareholder value adding the last brush strokes on what was already a very dark economic picture. Consumer confidence has paid, and consumers keep their wallets in their pockets, partly to savings encouraging.
It is an environment where both consumers and businesses are well advised to employ a defensive mentality just as aggressive as the Pittsburgh Steelers. But not Wal-Mart. Instead, the retail giant has gone on the offensive and attack the market with the enthusiasm that is more like the Drew Brees led New Orleans Saints.
In short, even if many consumers use a back-to-basics mentality, described Scott as CEO, Wal-Mart is not just stabbing with food and consumer staples. The chain is to use problems in the electronics market with the bankruptcy of Circuit City Stores Inc. (OTC: CCTYQ) and is even making major advance in electronics at Best Buy Co. Inc. (BBY).
For example, Wal-Mart is marketing both the Apple Inc. (AAPL) iPhone and Google Inc. (GOOG) G-Phone. It is also resorting to proactive advertising discounts through text messages and other aggressive tactics to its discounted merchandise to mark and bring customers to its stores. Needless to say, the strategy is working very well.
But what about the change in leadership? Neither I nor the Most analysts expect the recent announcement that Scott, 59, would retire as CEO of the retail giant, effective Feb. 1. But Scott will be succeeded by Michael T. "Mike" Duke, 58, head of the company's overseas operations, and an executive with significant global experience. So I am both comforted and optimistic.
I see continuity in the core of Wal-Mart strategies and, if anything, a refreshing shot in overseas strategies Wal-Mart.
In fact, this executive shift play out very well for Wal-Mart. With the announcement of its record fourth quarter sales and earnings in February, Wal-Mart Stores Inc. (WMT) was the world's first $ 100 billion retailer. With an increasing penetration of China, and continued, without success, even in countries with emerging markets like Mexico who are most affected by the continuing U.S. financial crisis off recession, Wal-Mart is ready to take advantage of its growing international trip pick.
Next year, while The world's most advanced economies will barely grow in the total, emerging economies, growth of between 3% and 8%, led by China Post. This should enabling the retailer's overseas sales to climb by as much as 10%, despite the global turmoil.
Finally, the U.S. recession to translate In an increasing market share for Wal-Mart here at home, while an increasing penetration in many faster-growing economies abroad will help propel both the upper and lower lines for the company. With a price / earnings ratio (P / E ratio) of 15 and a very low EBITDA multiple of just eight, this gain defensive play ready to continue to provide capital and market outperformance in the new year, despite a very difficult background. Wal-Mart should be a core stock in almost every portfolio.
ACTION TO TAKE: BUY Wal-Mart Stores Inc.. (NYSE: WMT), but do so with some care. Buy half a position today and leave some dry powder to the position to complete in the first quarter of next year, because the volatility will stay with us for some time to come. **
[Editor's note: Horacio Marquez was working as vice-president of the Merrill Lynch Emerging Markets Fixed Income Group in 1994 when he correctly predicted that both Argentina and Mexico were headed for currency crises - Cementing his reputation as an expert in both emerging markets and the nuances of global finance. Now Marquez brings that expertise to you with his newly created "Money Moves Alert "specialized trading service." Buy, Sell or Hold "is a Money Morning feature that has most recently analyzed companies like Hewlett-Packard Co. NYSE. (: HPQ), Apple Inc. (Nasdaq AAPL), Google Inc. (Nasdaq: GOOG), or the Brazilian ETF, the iShares MSCI Brazil Index (NYSE: EWZ), which rose 42% in six days after Marquez rated it as a purchase. "]"
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About the Author
Horacio R. Marquez is Emerging Market Specialist and Editor of the Money Map Report, and the Money Map VIP Trader. A native of Argentina, Marquez has more than 20 years’ experience as an investment banker, and is a recognized expert on both banking and investing strategies, as well as on the emerging markets of Latin America. He is also recognized as one of the investment industry’s most-talented research analysts.
How many Wal-Mart would come to the end of the year when I do this?
I currently own a share of Wal-Mart stock at Frame A Stock brought online. I work Wal-Mart part time 24 hours per week (Friday Night-Sunday Night). In each pay period, I'm $ 16.00 in Wal-Mart stock. Wal-Mart matches every $ 1, I have stock with an additional fifteen cents per dollar How Wal-Mart shares, or I would end this year? the pay period is every two weeks.
I just quit Walmart because they treat their employees like shit. They say I could not our quarterly bonus 2 weeks before its due time, because I was hired one day after the "deadline" but failed to mention this 3 months ago when I was accepted. The stock program is just one way for them to pay you back to them.
Backpack
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Barbie Horse 1994 Country Star Horse Wal*Mart Exclusive ITALY $145.00 |
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Lot of 13 Barbie’s – 9 by Avon, 4 by Wal-Mart $110.00 |
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RARE Wal-Mart Birthstone Afr Amer October Opal Barbie $112.50 |
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John Deere Barbie-2007-L4686-A Walmart Exclusive-NRFB~ $109.99 |
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Vintage 1987 PINK JUBILEE BARBIE WALMART 25TH ANNIVERSARY HTF $89.99 |
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NRFB Wal-Mart Scents of Style Mary Kate & Ashley Dolls $90.00 |
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Bratz 24″ Inch Tall Big Yasmin Wal-Mart Exclusive New in Box $79.95 |
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Bratz 24″ Inch Tall Big Cloe Wal-Mart Exclusive New in Box Free US Shipping $74.95 |
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#645 Wal-Mart Hawaiian Vacation Afr Amer Barbie & Kelly $85.50 |
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Disney’s Happy Birthday Snow White Mattel Doll Wal-Mart Exclusive NEW MISP 1996 $64.99 |
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BARBIE HOLIDAY DANCE MUSICAL BY MR CHRISTMAS – WALMART EXCLUSIVE (c) 1997 $59.99 |
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RARE NRFB Wal-Mart Toothfairy Barbies #1, #2 & #5 $63.75 |
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35TH ANNIVERSARY BARBIE WAL*MART EXCLUSIVE(LOT OF 3 DOLLS 11″) BARBIE & FRIENDS $74.99 |
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LOT OF 2 BARBIE DOLLS CHIC & WALMART DOLLS MIB NRFB 90′ $49.97 |
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1995 Walmart Skating Star Barbie Ice Skating NRFB $59.00 |
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#2878 NRFB Mattel Wal-Mart Red White & Cute Kelly, Deidre & Liana Dolls $68.39 |
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#1764 NRFB Mattel Wal-Mart Sleepover Girls Barbie & Kelly Giftset $67.99 |
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NRFB Wal-Mart Fun Room Playset w/Kelly Size Dolls $51.00 |
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VINTAGE 1987 PINK JUBILEE BARBIE DOLL WALMART 25TH ANNIVERSARY NEW NRFB $64.99 |
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RARE NRFB Wal-Mart Disney Holiday Cinderella Special Ed $63.75 |
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#2824 NRFB Wal-Mart Tea Time Barbie with Li’l Bear & Cozy Bunny African American $62.99 |
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Monster High CUPID, Walmart Exclusive, very rare mint new in box $49.80 |
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BNIB Lalaloopsy Holly Sleighbells 2 Doll Lot – Full Size AND Mini Walmart Target $60.00 |
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BARBIE DOLL WALMART 35TH ANNIVERSARY PINK & SILVER GOWN $59.99 |
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MONSTER HIGH C A Cupid Draculaura’s Sweet 1600 Doll Walmart Exclusive Doll Pink $59.98 |
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SUPERSTAR BARBIE 1993 AFRICAN AMERICAN WAL-MART EXCLUSIVE IN PINK VINTAGE NRFB $59.95 |
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Wal-Mart Wizard of Oz Glinda the Good Witch Soft Doll $45.49 |
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MONSTER HIGH DOLL NIB NEW VHTF RARE C.A. Cupid Sweet 1600 Exclusive Walmart $45.99 |
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3 Brand new Barbies – Holiday Belle, Holiday Cinderella, Belle Wal-Mart exclusiv $45.00 |
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1992 Barbie Anniversary Star Walmart 30th Anniversary $46.71 |
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RARE NIB Wal-Mart Party Party Party Christie (Barbie) $45.00 |
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NIB Monster High Sweet 1600 doll “C.A. CUPID” – Walmart Exclusive (Hard to Find) $35.99 |
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RARE VINTAGE NIB WALMART EXCLUSIVE 1990 DREAM FANTASY BARBIE DOLL BY MATTEL 7335 $44.99 |
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RARE Wal-Mart NRFB Lifestyle Teacher Kelsey Giftset $37.49 |
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#816 NRFB Wal-Mart Zodiac Collection Gemini Barbie $50.99 |
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#638 NRFB Wal-Mart Happy Birthday Snow White Doll $50.99 |
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RARE Wal-Mart Country Bride Blonde & Brunette Barbie $38.50 |
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VINTAGE 1997 SHOPPING TIME TERESA BARBIE – WAL MART EXC – SPECIAL EDITION – NRFB $50.00 |
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Lalaloopsy Holly Sleighbells Sleigh Bells Wal-Mart Exclusive Full Size Doll HTF! $39.99 |
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NIB Monster High C.A Cupid Doll Sweet 1600 Walmart Exclusive VHTF! $34.99 |
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Wal-Mart Color Couleur Crayons Kelly, Jenny & Lorena $42.75 |
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RARE VINTAGE NIB MIB WALMART EXCLUSIVE 1993 SUPERSTAR BARBIE DOLL MATTEL # 10592 $39.99 |
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#1050 NIB Mattel Wal-Mart Country Western Star Afr Amer $37.50 |
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Monster High CUPID WALMART EXCLUSIVE NEW IN BOX $35.00 |
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#2775 NRFB Mattel Wal-Mart Stores Tea Time Barbie & Friends Giftset $35.00 |
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RARE NRFB Wal-Mart Superstar African American Barbie $37.50 |
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1994 Country Bride Barbie Blonde Walmart Special Ed $34.99 |
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#808 NIB Mattel Wal-Mart Lavender Looks Barbie $35.75 |
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1996 Walmart Sweet Magnolia Barbie Doll NRFB Special Edition Retired Vintage $45.00 |
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Rare NIB African American Walmart Shopping Time Barbie $35.00 |
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1997 Walmart Special Edition Portrait in Blue Barbie Doll NRFB $45.00 |
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Cabbage Patch Kids Babies GET BETTER BABY Bren Jocelyn 10/27 WAL-MART EXCLUSIVE $44.95 |
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Cabbage Patch Kids Babies GET BETTER BABY Derek Jacob 6/13 WAL-MART EXCLUSIVE $44.95 |
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1997 BARBIE SHOPPING TIME WALMART DOLL MIB NRFB $22.97 |
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NRFB 2 Wal-Mart Purses Galore Barbie in Pink & Purple $35.00 |
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#2253 NRFB Mattel Wal-Mart Stores 35th Anniversary Teresa (Barbie) Doll $31.50 |
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#767 NRFB Wal-Mart Hawaiian Fun Barbie & Kelly Giftset $31.50 |
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RARE NRFB Wal-Mart Ballroom Beauty Barbie Fashion Doll $35.75 |
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NRFB Walmart Dream Fantasy Barbie Fashion Doll $35.75 |
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Lalaloopsy Large Holly Sleighbells with Reindeer Christmas Walmart Exclusive $31.99 |
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#2147 NRFB Mattel Wal-Mart Stores Frills & Fantasy Barbie Fashion Doll $32.49 |
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NIB Barbie Party Party Party 2001 Wal-Mart Special Ed. $29.99 |
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RARE NIB Wal-Mart Shopping Time African American Barbie $33.75 |
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1997 35th Anniversary Barbie Walmart Exclusive MIB $29.99 |
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1994 Walmart Special Edition Country Bride Barbie MIB $40.50 |
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Pretty Choices Barbie Walmart Special Edition 1996 MIB $40.00 |
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#632 NIB Wal-Mart Party Party Party Teresa (Barbie) $30.00 |
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1997 WAL-MART PORTRAIT IN BLUE BARBIE 1364 NRFB $39.99 |
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Mattel Monster High Wal Mart Exclusive C A Cupid Figure Doll Daughter Of eros $39.99 |
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SHOPPING TIME BARBIE WAL-MART Special Edition Doll Flowers Perfume Shoes Vintage $39.95 |
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Wal Mart’s Special Edition Sweet Magnolia Brunette & Blonde Barbie Dolls $29.99 |
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#410 Mattel Wal-Mart Purses Galore Teresa (Barbie) Doll $30.00 |
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RARE NRFB Wal-Mart 30th Anniversary Star Barbie Doll $29.25 |
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RARE NRFB Mattel Wal-Mart Superstar Barbie Fashion Doll $29.25 |
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NRFB 1990 1994 Walmart Special Edition Lot Barbie Country Bride Dream Fantasy $25.00 |
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1991 BALLROOM BEAUTY BARBIE!! WALMART SPECIAL LIMITED EDITION!! BEAUTIFUL!! $26.99 |
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NRFB Wal-Mart Portrait In Blue Barbie Fashion Doll $29.25 |
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Lot of 2 astrology barbie dolls, NIB, Leo and Aquarius 2004 from Walmart $25.00 |
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1997 WALMART 35th. ANNIVERSARY BARBIE DOLL $29.99 |
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35TH ANNIVERSARY BARBIE DOLL WALMART EXCLUSIVE DOLL~NEW~1997 COLLECTOR DOLL $27.99 |
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COUNTRY BRIDE BARBIE (1995) – Wal-Mart Exclusive – NRFB $18.00 |
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NEW PRETTY CHOICES BARIBIE WALMART SPECIAL EDITION $36.00 |
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SWEET MAGNOLIA BARBIE WALMART EXCLUSIVE FREE SHIPPING $36.00 |
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Skating Star Barbie – Wal Mart Special Edition $30.00 |
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1992 Cabbage Patch Kids Holiday Edition Elf Walmart Exclusive $24.99 |
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1992 Cabbage Patch Kids Holiday Edition Santa Walmart Exclusive $24.99 |
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2011 DISNEY FAIRIES 4 PACK FAIRIES FOR ALL SEASONS A WALMART ONLY EXCLUSIVE $25.99 |
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Retired Collector Country Bride Barbie Wal-Mart Special Edition 1994 NRFB $29.95 |
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#2521 NRFB Mattel Wal-Mart Purses Galore Barbie in Pink $26.00 |
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Happy Birthday Collectible Disney Snow White Doll Wal-Mart, MIB $22.00 |
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LAVENDER LOOKS BARBIE WALMART SLE #3963 NIB 1989 So many ways to change looks $34.99 |
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1997 WAL-MART 35TH ANNIVERSARY BARBIE 17245 NRFB $34.99 |
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Target 35th Anniversary Barbie and Walmart 35th Anniversary Barbie Lot, NRFB $18.00 |
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35th Anniversary Barbie Special Edition Walmart NRFB $24.99 |
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RARE NRFB Wal-Mart Puzzle Craze Teresa (Barbie) Doll $26.25 |
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1997 PORTRAIT IN BLUE AUBURN HAIR WAL MART BARBIE DOLL $24.00 |
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1997 PORTRAIT IN BLUE DARK HAIR WAL MART BARBIE DOLL $24.00 |
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NRFB 1992 WAL-MART 30TH ANNIVERSARY STAR BARBIE DOLL $25.00 |
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1995 Walmart Skating Star Barbie Special Edition NRFB New See Pictures Mint cond $24.00 |
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1994 BARBIE Wal-Mart COUNTRY BRIDE BARBIE (AFRICAN) $24.99 |
