Tuesday, April 5, 2011

Wal-Mart (WMT) Looking to Major Appliances for Revenue Boost

In a move to increase same-store sales, Wal-Mart (NYSE:WMT) is again considering selling major appliances through its thousands of outlets, starting in Texas in 2011 to see how it goes.

Since Wal-Mart is a low-margin discount retailer, this may not be a bad idea, as they operate on turning over inventory rather than gross margins, as other stores do.

Appliances are notorious for being low-margin items, and this would be nod toward boosting revenue, although higher turnover would boost earnings if that's how it works out for them, as it does with other products.

The pilot program in Texas will start off with appliance from General Electric (NYSE:G), which will launch at over 100 stores in the Lone Star State in the beginning.

Companies that could be hurt by this include appliance majors like Lowes (NYSE:LOW), Sears (NASDAQ:SHLD) and Home Depot (NYSE:HD).

Questions on how Wal-Mart would sale the items, along with whether or not it would have to change its model in that department (as customers usually are more prone to want questions answered with these items) and have more trained people in that regard.

Sales questions would be related to if they would decide to offer financing or not, although some pretty expensive TVs and computers fly out the door, so that may not be an issue for them.

Wal-Mart closed Monday at $52.65, gaining $0.52, or 1.00 percent.

No comments: