By  on June 1, 2007

ROGERS, Ark. — Despite a flirtation with higher-end merchandise, Wal-Mart Stores Inc.'s top apparel executive on Thursday recommitted the retailer to bargain prices and rollbacks.

Claire Watts, executive vice president, apparel merchandising, said during a media tour of a Supercenter prototype here that Wal-Mart's core strategy is focused on price leadership. That philosophy built it into the world's largest retailer, but in an effort to move upscale the company has made missteps in apparel and other categories.

"You'll see rollbacks, 'save even more' [signs] and two-for-$10 deals,'' Watts said. "Our customer is really responding to it.''

She did not address Wal-Mart's mistakes in apparel, including the Metro 7 line that has been reduced and the first designer label, George ME by Mark Eisen, which has been significantly scaled back. Instead, Watts talked about "winning in essentials'' and stressed that "we try to be sensitive to how much money they (customers) have in their wallet.''

Asked about $20 items in Metro 7 and George ME, Watts said, "Those prices are above where we want to be,'' adding that Wal-Mart would still sell some key seasonal apparel in the $20 to $30 price range.

Amid images of the company's ubiquitous smiley face symbol and signs promoting rollbacks, Watts reaffirmed the model of Wal-Mart's so-called triangle — at the top, fashion-forward merchandise comprising less than 10 percent of the assortment, in the middle, fashion basics such as ruched polo shirts and, at the bottom, items such as basic T-shirts. She spoke near an area promoting the No Boundaries juniors line that touted the environmental benefits of bamboo and cotton-blend T-shirts priced at two for $12, marked down from $7.43 each.

She said the retailer would feature major displays of items in which it believes it can be dominant, such as Bermuda shorts, tank tops and cotton jersey shorts.

The tour occurred during Wal-Mart's third annual media conference. It was a prelude to the annual shareholders' meeting today, which comes amid increasing pressures related to the stagnant stock price, apparel blunders, the potential of a second-quarter earnings miss and challenges to the retailer's corporate image.On another issue, Wal-Mart's chief merchant, John Fleming, was questioned about the retailer's desire to open in urban markets to reach new customers. "There's a lot of complexity in segmentation,'' he said. "It's a work in progress. It will be a year or so before we're fully activated with merchandise for each area'' throughout the stores.

And Doug McMillon, president and chief executive officer of Sam's Club, Wal-Mart's $40 billion warehouse chain, indicated that the unit will not be spun off or sold, and that there was nothing imminent regarding a potential takeover of the third-ranked warehouse company, B.J.'s Wholesale Club Inc. of Natick, Mass.

During a tour of a Sam's Club store in Bentonville, Ark., Patty Warwick, who oversees apparel, jewelry and handbags as senior vice president, said the division is "trying to cement and develop direct relationships "with companies such as Prada, Coach and Kate Spade, and with other high-end manufacturers.”

Since Sam's Club caters to a more affluent customer base on average than Wal-Mart, the warehouse division could be a learning opportunity for the parent firm if Sam's Club succeeds in forging more relationships with key brands.

"Jewelry has helped us establish a good position with our female member,'' giving credibility to Sam's Club in other categories, Warwick said. Sam's Club is ahead of last year in apparel but is not meeting internal goals.

Sam's Club is ending a test of a program to sell men's suits. "It was not a great success,'' she said.

In another development, the New Jersey Supreme Court on Thursday certified a class-action lawsuit against Wal-Mart filed by current and former employees who alleged that the company did not give them required meal and rest breaks, and forced them to work off-the-clock. The 5-to-1 decision revived the New Jersey workers' lawsuit, which had been refused class-action status by a trial judge and an appellate court.

Wal-Mart spokesman John Simley said the company was disappointed with the decision and was studying its options. "It's our policy to pay every associate for every hour that they have worked,'' he said.

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