It is old news, very old, that the last time Wal-Mart (NYSE: WMT) tried to sell brand-name clothes, things did not go well. But if at first you don't succeed try, try again.

The largest retailer has good reason to want to be in the fashion clothes business. According to The Wall Street Journal "Higher fashion apparel and bedding have higher profit margins than other merchandise -- about 31%, a full 10 percentage points higher than almost every other category the discounter sells." The company intends to sell brands that are not terribly expensive from designers including Norma Kamali and Mark Eisen.

The Wal-Mart move is a bad one for two reasons. It has yet to prove that people who want discount merchandise like food and blue jeans want to come to Wal-Mart for nice clothing. These shoppers can go to clothing stores and get good deals and probably a larger selection.

Another, perhaps more important consideration, is that the country is in a recession. A typical Wal-Mart shopper is probably struggling to make mortgage payments, buy gas, groceries and new shoes. That does not put fancy clothing very high on the list.

Wal-Mart should stick to its knitting.

Douglas A. McIntyre is an editor at 247wallst.com.

Wal-Mart (WMT) to take another try at fashion business originally appeared on BloggingStocks on Thu, 24 Apr 2008 11:35:00 EST. Please see our terms for use of feeds.

Target Corp. (NYSE: TGT) vs. Wal-Mart Stores Inc. (NYSE: WMT). As Georges Yared wrote in our Battle of the Brands special, Wal-Mart is the behemoth, and Target is a rising titan that could pose a substantial threat to its dominance. I've always thought of Wal-Mart as being the better logistics company, and Target is better at retailing and merchandising. Target's runaway success in fashion, and Wal-Mart's dismal failure provide evidence of this.

In March, I wrote about Target's hottest couture showing up on eBay, often at several times its retail price. Well Wal-Mart's latest foray into fashion won't be showing up on eBay, but you might be able to find it at your local dollar store sometime soon, as several hundred of the stores that stocked its Mark Eisen line have pulled it due to lack of consumer interest. Part of the problem was a lack of promotion, and most Wal-Mart shoppers don't know who Mark Eisen is. As portfolio manager Patricia Edwards told the Wall Street Journal (subscription required), "Wal-Mart is so good at providing things based on price that I'm not certain they've yet grasped how to promote items that aren't solely based on price."

One of the problems I think Wal-Mart's having is that, without brand recognition, the products just aren't that great, or even that cheap. I don't buy clothing at Wal-Mart, but not because I'm a snob. You can usually get nicer stuff for less money at TJMaxx or Filene's Basement if you're willing to look around a little.

Target was able to come up with looks that were stylish and weren't available elsewhere. Wal-Mart's trying to compete on price in the fashion industry, and I think it's probably destined to fail.

Wal-Mart no match for Target on fashion originally appeared on BloggingStocks on Mon, 21 May 2007 20:20:00 EST. Please see our terms for use of feeds.