Wal-Mart's Fashion Maven Departs As Trendy Merchandise Languishes

By Ylan Q. Mui
Washington Post Staff Writer
Saturday, July 21, 2007

The Wal-Mart executive who tried to dress up the no-frills discount retailer in skinny jeans and sateen bedsheets has resigned, the company said yesterday, after shoppers failed to respond to the trendy new merchandise.

Claire A. Watts, executive vice president of apparel merchandising, will leave her post next week to pursue "other career interests," Wal-Mart spokeswoman Sarah Clark said. Watts joined the company in 1997 as divisional merchandise manager of product development and became a vice president two years later.

Her departure highlights the troubles that have befallen Wal-Mart's foray into fashion. The strategy was intended to attract more affluent shoppers and encourage existing customers to buy more than cheap toilet paper and laundry detergent. But the company moved too quickly, suffering from distribution troubles and poor response in the nation's heartland. Sales at stores open at least a year, a key measure of health in retail, have been tepid, with apparel and home sales dragging down performance.

Charles Grom, an analyst with J.P. Morgan Securities, estimated that clothing accounts for 10 to 15 percent of Wal-Mart's total sales. In a research note yesterday, he called Watts's departure and the installation of her replacements "long overdue."

"We think that the changes . . . are steps in the right direction," he wrote.

Watts had been a rising star at Wal-Mart. Under her tenure, the folksy retailer with headquarters in Bentonville, Ark., opened an office in New York to stay abreast of developments in fashion and design. She helped oversee the debut of the chain's hip Metro 7 clothing line in fall 2005 that was advertised in a glossy spread in Vogue magazine. Watts received the Sam M. Walton Hero Award and the Sam M. Walton Entrepreneur of the Year Award, the highest internal honor given to the company's senior management. She has been named one of Fortune magazine's 50 most influential women in business.

"Claire is a talented merchant," Clark said. "The company continues to move in the right direction, and much of that credit goes to Claire."

But Wal-Mart's gamble on fashion hasn't paid off. Last fall, chief executive H. Lee Scott Jr. said Wal-Mart had introduced its Metro 7 line too quickly. The clothes were in 1,500 Wal-Mart stores across the country. Company officials said Metro 7 was more suited to just 600 locations, mainly on the coasts.

In January, the retailer announced a reorganization of top management as part of a three-year plan to boost sales and profitability under Eduardo Castro-Wright, president of the company's U.S. stores. The move stripped Watts of her responsibility for home goods.

Clark said she could not provide additional comments about the reason for Watts's departure or her severance package. Watts's duties will be split between Mark Larsen, who oversaw merchandise for babies, children and men, and Dottie Mattison, who worked for Walmart.com.

Marshal Cohen, a senior analyst with consumer research firm NPD Group, said Watts's departure did not mean that fashion was dead at Wal-Mart. But he said the retailer needed to refocus on the desires of its core customers rather than chase after trendsetters.

"It's more than just one individual leader can really do," he said. "It's going to take a whole cultural change."

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