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Walmart's Sam's Club to Source Goods from 100 Local Suppliers

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Retail giant Wal-Mart Stores, Inc.’s (WMT - Free Report) Sam’s Club division has announced that it is participating in a San Diego-based supplier event, in which it will provide more than 100 regional small businesses the opportunity to supply their food and beverage products to its stores across the country. Out of an application pool of more than 13,000 suppliers, Sam’s Club has selected 100 small businesses, whose product offerings range from organic and all-natural snacks and beverages; health-conscious grocery items; local beer, wine and tequila brands; and specialty sauces, cheeses and meats.

The event supports Sam’s Club Supplier Diversity program, which aims to increase suppliers with particular emphasis on small regional businesses and women-, veteran- and minority-owned businesses.

Walmart has been struggling of late. It performed disappointingly for five straight quarters before turning around in the recently reported second quarter of fiscal 2015. The retail giant posted in-line earnings and better-than-expected revenues.

Walmart’s earnings of $1.21 per share matched the Zacks Consensus Estimate but declined 1.6% from the year-ago earnings of $1.23 per share due to flat comps in the U.S. and Sam’s Club and a decline in operating income. Total revenue of the retailer increased 2.8% to $120.1 billion and beat the Zacks Consensus Estimate of $119.1 billion on improvements in the International business, higher Neighborhood Market sales in the U.S. and strong e-commerce growth. Global e-commerce sales increased approximately 24% on a constant currency basis, with double-digit growth in the U.S., U.K., China and Brazil.

However, Walmart lowered its fiscal 2015 earnings guidance to a range of $4.90 to $5.15 per share, from the previous range of $5.10 to $5.45, due to incremental investments in e-commerce and higher U.S. health-care costs than previously anticipated. (Read: Walmart Falls After Cut in Fiscal View, Q2 Earnings In Line).

In such a scenario, the move to enable regional, women- and minority-owned small businesses to grow and to bring new innovative products for consumers is surely an encouraging step to combat a sluggish revenue environment. This will also strengthen Sam’s Club’s relationship with local suppliers. Walmart currently holds a Zacks Rank #3 (Hold).

Other Stocks to Consider

Some better-ranked retailers worth considering include Citi Trends Inc. , Mens Wearhouse Inc. and Buckle Inc. (BKE - Free Report) . While Citi Trends and Mens Wearhouse sport a Zacks Rank #1 (Strong Buy), Buckle Inc. holds a Zacks Rank #2 (Buy).

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