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5 Reasons Why Wal-Mart Should Have Said Yes to Biden's Invitation Yesterday

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The nation's largest seller of guns will go to Washington, along with the NRA.

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Yesterday, Wal-Mart (NYSE:WMT) turned down an invitation to the White House. Today, the company has changed its mind. The invitation, sent on January 8, was to attend a series of meetings that Vice President Joe Biden is holding this week as he and other members of the administration begin their broad review of gun violence in America. The review follows the tragic shootings in Newtown, but it is really the culmination of public and media outrage over a particularly bad year for shootings, with Newtown and the Aurora, Colorado, shooting this summer.

So why did the people at Wal-Mart change their minds?

1. Wal-Mart just so happens to be the nation's largest seller of guns and ammunition (though it doesn't release data on gun sales). During Black Friday sales in November 2012, the FBI processed background checks for 154,000 purchases of guns. For the month of November, that number was 2 million, and not all sales require background checks (yet). With gun sales rising steadily and spiking in the last half of 2012, it seems like the nation's biggest gun seller should be a major player in the Washington talks

2. The NRA is attending. The meetings will be attended by gun owners' groups, of which the NRA is foremost, and sporting groups that use guns for hunting and shooting targets. Wal-Mart supplies many of the members of these groups with their firearms and ammunition. In other words, what better time to network!

3. In 2008, Wal-Mart joined the Responsible Firearms Retailer Partnership, a group founded by Mayors Against Illegal Guns (co-founded by NYC's Michael Bloomberg and Boston's Thomas Menino) whose primary concern is pushing retailers to adopt stricter rules for gun sales. Attending the meeting would certainly be the responsible thing to do.

4. Wal-Mart may potentially benefit from one of Biden's proposals for gun control, which would force independent gun sellers to conduct background checks on customers and process their transactions at certified dealers such as Wal-Mart. Since Wal-Mart is the largest seller of guns in the US, with over 1,750 of its stores selling firearms and ammunition, such a law would send more gun sales from homes and showrooms to Wal-Mart and its fellow merchants of guns. That being said, if the ban on assault weapons were reinstated, Wal-Mart's business would certainly be hurt. (Wal-Mart alone makes 13% of all sales for Freedom Group, the company that makes the Bushmaster rifle, one of the guns used in Newtown.)

5. Wal-Mart's influence could be huge. With stores across the country, Wal-Mart's acceptance of stricter gun sales and control could be a major motivator for national change. The company would probably get a pretty good PR boost, and sales would benefit from the stipulation forcing independent gun sells to conduct background checks at certified dealers.

Wal-Mart's change of heart is a good sign for Biden's talks, but adopting stricter gun policies will not be easy for Wal-Mart and other retailers. If they are implemented after these talks, universal background checks will take a toll on retailers, especially smaller ones. Background checks are time consuming and fees to customers are capped by law at $10 per gun, which wouldn't necessarily be profitable for retailers.

In any case, it's not every day that a company so big as Wal-Mart publicly changes its mind so quickly. According to spokesman David Tovar, "We underestimated the expectation to attend the meeting." There are definitely a lot of expectations, and anxieties, surrounding these talks and the future of gun control in America. As the nation's largest seller of guns and ammunition, I don't see how Wal-Mart could have underestimated the nation's expectations.
No positions in stocks mentioned.
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