In a major revamping of its sluggish clothing business, Wal-Mart Stores will shut two divisions at its headquarters in Arkansas, eliminate dozens of positions and move dozens more to New York City.
This will be the first time in years that Wal-Mart, a company renowned for growth, has laid off a significant number of workers at its headquarters.
The overhaul, which has not been made public, is intended to revive one of the weakest departments in Wal-Mart’s 5,000 stores: men’s, women’s and children’s apparel, a $30 billion business for the retailer.
Over the last several years, under the direction of Claire Watts, the top clothing executive, the company experimented with somewhat more upscale collections. Wal-Mart created new divisions to spot trends and to design apparel.
But customers largely rejected the new looks — and, in July, Wal-Mart pushed out Ms. Watts. Today, it is emphasizing what executives call “key items,” like basic, brightly colored T-shirts, over outfits from clothing collections.
The shift effectively overturns the strategy and structure put in place by Ms. Watts. In an internal announcement Tuesday, the company said it would close its product development and sourcing divisions, a company spokeswoman, Linda Blakley, confirmed.
As a result, dozens of positions will be eliminated, Ms. Blakley said. The company would not specify how many, and other details remained sketchy Tuesday.
“We will do everything we can to minimize the impact” of the job eliminations, Ms. Blakley said, like offering workers different jobs within Wal-Mart.
The work handled by the two divisions will be shifted to different units, called buying and brand merchandising. The buying unit will be based at Wal-Mart’s headquarters in Bentonville, Ark.; brand merchandising will be in New York City. As many as 30 workers will move to New York City from Arkansas.
“We wanted a structure where roles were clearer and we can get merchandise into stores as quickly as possible,” Ms. Blakley said.
Bill Dreher, an analyst at Deutsche Bank Securities, said Wal-Mart had recognized the previous strategy’s problems.
“They had tried to overreach — on their own, with little expertise or credibility in fashion. It was not bound for success,” he said. “Now, their aspirations in fashion are much more modest.” The reorganization, he added, “is a big deal, because it means Wal-Mart can finally get apparel right.”
Ms. Blakley said Wal-Mart wanted to “present key items with authority” and “make big bets in apparel where the growth is.”