It's the Harbor Freight strategy. Though I'm not sure Walmart can build the sort of positive reputation that Harbor Freight enjoys.
Like Amazon and fakes/harmful products, you only have to get it right over x% of the time (is it half?) or more, in order to profit, at their scale.
From their logo "Quality tools and ridiculously low prices"
Seems they began selling on tools bought from bankrupt companies, and now act as a secondary channel for many "real" high end brands. (Ie they can sell overstock through this company without polluting their main market / brand)
I am going to guess they do more than just tools now.