We all know that Costco (NASDAQ:COST) has made a name for itself in bulk product sales, thanks largely to the Kirkland Signature label. Now, word has emerged that Walmart (NYSE:WMT) wants to imitate Costco’s Kirkland and is actively working to put such a plan in place. Investors, however, are skeptical that this will address slowing sales issues and sent shares down fractionally in Thursday morning’s trading.
Interestingly, Sam’s Club—a Walmart property that’s a lot like Costco—already has a Kirkland in Member’s Mark, a private brand that functions much the same way Kirkland does. However, Member’s Mark doesn’t do half the sales that Kirkland does, and to change that, Walmart is working on shoring up the quality at Member’s Mark to make it a more attractive brand.
Reports note the move started after Megan Crozier, chief merchant of Sam’s Club, bought an inflatable pool for her kids back during COVID-19’s endless pile of restrictions and watched it collapse after a few uses. That leaking pile of plastic sparked an idea in Crozier, perhaps that her job would be on the line should enough people get fed up with merchandise like this, so she started up the initiative to improve quality.
Meanwhile, Store Closures
So, while Walmart is working to bolster quality on one end, there has to be resources available to make that quality improvement happen. Thus, Walmart is looking to close stores after years of frantic openings. So far this year, Walmart has shuttered about a dozen locations, which should lower some fixed costs and give Walmart more to work with in terms of making Member’s Mark a brand that it can be proud of. It also shut down its healthcare division, including 51 health clinics nationwide.
Is Walmart a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Strong Buy consensus rating on WMT stock based on 25 Buys and three Holds assigned in the past three months, as indicated by the graphic below. After a 33.34% rally in its share price over the past year, the average WMT price target of $73.44 per share implies 7.9% upside potential.
