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Walmart Backs U.S. Manufacturing Sector, to Host Open Call

Zacks Equity Research

Retail giant Wal-Mart Stores, Inc. (WMT) is about to host an ‘Open Call’ event today where it has invited more than 500 American manufacturers and suppliers to pitch products in the country. This marks a step forward for Walmart, which encourages domestic sourcing of products and sells them thereafter.

During the open call, suppliers will meet with the company’s senior leaders and merchants to sell their ‘Made in USA’ products at affordable prices through Walmart’s stores, clubs and online. Walmart’s increasing purchases will thereby support American jobs.

Being the largest private employer in the U.S., Walmart took an initiative in late-Jan 2013 to contribute to the revitalization of the sluggish U.S. economy and intended to spend $50 billion in the next 10 years to buy more American merchandise. (Read: Walmart Leads Drive to Create Jobs). Walmart now plans to invest $250 billion cumulatively over the next 10 years, which will create one million jobs, including the jobs in manufacturing and related services.

Walmart believes that the majority of the companies in the U.S. have been facing macroeconomic headwinds for a long time. Moreover, input costs overseas are very high, which limit U.S. companies to produce goods outside the U.S.  Wal-Mart has been struggling with its revenues and profits since the past few quarters. The company is therefore seeking new ways to boost revenue amid macro-economic headwinds like budget-strained customers, reductions in government benefits, higher taxes, tighter credit and higher group healthcare costs.

According to data from Walmart’s suppliers, two-third of the products imported by Walmart can be made, sourced, assembled or grown in America. Walmart, therefore, plans to focus on buying more U.S.-manufactured products like sporting goods, fashion basics, storage products, and games and paper products, which will not only boost its domestic revenues but will also contribute to the revival of the sluggish U.S. economy.

The commitment to increase domestic sourcing of the products it sells and create jobs shows Walmart’s dedication to find innovative solutions to fix the economy. Walmart currently carries a Zacks Rank #4 (Sell).

Better-ranked retailers include The Kroger Co. (KR), Conn’s Inc. (CONN) and Aaron’s Inc. (AAN), all of which hold a Zacks Rank #2 (Buy).

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