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Wal-Mart Retreats Again on Fashion
Wal-Mart said its designer line by Mark Eisen is being pulled from an undisclosed number of its U.S. stores that carry it. Wal-Mart hired Eisen, a former Ann Taylor Stores design executive, a year ago for its George ME line of women's clothing. However, the giant retailer said the reduction will not be as dramatic as the rollback of its urban-style Metro 7 apparel line. It said the George ME line is still performing well in most stores.
The move comes as Wal-Mart looks to clear out stocks of unsold clothing that are clogging store aisles and pressuring profits, according to a Wall Street Journal report. The paper said Wal-Mart's CEO told it that clearing out stocks of unsold merchandise will be a difficult chore and could pressure margins all summer.
Commentary: Wal-Mart is discovering its weakness -- that it cannot emulate the success at Target in crafting a fashion image. Designer clothes have failed to impress many of Wal- Mart's core customers and are not attracting enough new fashion-oriented shoppers. As Bernard Sands' senior retail analyst Richard Hastings told the Associated Press, "You're not going to get someone to think about dressing up for dinner tonight at Café Pierre while they're inside a Wal-Mart." In the short term, Wal-Mart's challenge will be in clearing out unsold apparel inventory without hurting margins too much. Over the long haul, its challenge will be to boost its image in categories (particularly fashion apparel) where it does not resonate with shoppers or get out of those categories.
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