Aren't they also the manufacturer of their own fabric lines? This means that there is no distributor and no re-seller to have markups along the way. (I have a friend who is a marketer and works in between the food manufacturers and the distributors of certain food brands, so there may even be more levels -- all who mark up the price to make their own piece of the profit).
I have had no problems with CT fabrics. While I do think their quality is a little lower than the LQS, I would put them on par with Hancock Fabrics and Joanns quilt fabric lines. Haven't seen WalMarts in a long time, but if I had to guess I would say CT was higher quality, only because HF and J's are generally higher quality than WM.
Also I can't afford for every quilt I make to be LQS quality -- especially baby blankets, etc. I wish I could...but at $10+ per yard, I wouldn't be able to afford it!