The Wall Street Journal-20080131-Wal-Mart Revamps Apparel Operations

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Wal-Mart Revamps Apparel Operations

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Wal-Mart Stores Inc., in a move to resuscitate its flagging apparel business, will close its existing product-development and sourcing teams and divide the unit into two hubs: brand merchandising, based in New York; and buying, to be based in its Bentonville, Ark., headquarters office.

As part of the plan, the company will cut dozens of jobs in those units at its headquarters -- those employees will be offered other jobs in Bentonville -- and move dozens more to New York City. The plan was earlier reported in the New York Times.

The world's largest retailer has tried for years to muscle into the fashion business. It has showcased its offerings in conjunction with New York's Fashion Week, taken out elaborate advertising spreads in Vogue magazine, and even staffed an office in New York City to be more keyed into trends.

But a big dive into more fashionable and higher-price apparel at the expense of basics alienated Wal-Mart's loyal core customers. Last spring, the retailer had a large apparel inventory buildup that compressed earnings.

"We needed to make changes to make sure our apparel was relevant and for speed to market," said Wal-Mart spokeswoman Linda Blakely of the change.

The New York-based merchandising team will handle the company's private-label brands, including Metro 7, Faded Glory and George. Its responsibilities will include textile design, vendor selection and cost negotiation.

The buying organization will decide the amount of private and brand merchandise that goes into individual stores, set pricing and work with planning and replenishment to make sure shelves are stocked with the best-selling items.