My local Wal-Mart isn't exactly my favorite place to buy fish from, but it could be worse. They have better otos than any other place around, and one time I lucked out and found a characidium in one of the tanks there. I do see the occasional dead fish, but that is expected even in good lfs's. In general the fish are in pretty good health.
Wal-Mart is much better than a certain lfs I visited today. That place had dead fish in every tank, and the ones that were alive were severely diseased and/or dying. No exaggeration here - 90% of the fish in that place that were still living were well on their way to dying. Cases of ich worse than any I have ever seen, emaciated puffers with chunks of flesh missing, fish with popeye, etc. It's too bad, because they do get some unique fish in from time to time, but I will never buy from that place again. Such a place shouldn't be selling fish!