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.
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