Montgomery Ward & Co., the giant retail chain that suffered its greatest losses in history last year, has begun reorganizing its stores and dropping unprofitable lines of merchandise in a shake-up that could eliminate up to 1,250 managers' positions, company officials said yesterday.

Ward's, which is expected to report 1981 losses of more than $200 million, is dropping unprofitable items such as carpets and men's suits and is combining other departments in moves that Wall Street analysts regard as long overdue.

Ward's, which once was second in sales volume only to Sears, Roebuck & Co. among the nation's retailers, has dropped to sixth since it was purchased in 1976 by Mobil Oil Corp. Its annual sales are well over $5 billion, but for nearly three years its losses have mounted, and only cash infusions of more than $300 million from Mobil have kept it afloat.

Nine months ago, after a long period of corporate indecision, Mobil brought in Steven L. Pistner from the Dayton-Hudson stores of Minneapolis to be president and chief executive officer. Pistner scrapped plans to convert most of Ward's stores into semidiscount units known as Jefferson Ward, and ordered the closing of about 30 unprofitable units.

Ward's still operates about 350 stores nationwide, including seven in the Washington area, and has more than 100,000 employes. Company spokesman Kenneth Darre said the reorganization now in progress is part of a long-range strategy devised by Pistner to turn Ward's around.

Kenneth Darre, Ward's spokesman, said the current phase of the reorganization involves the merger of what had been separate retail departments under separate managers, such as hardware and housewares.

The reshuffle, which began in Ward's Chicago-area stores on Thursday, evidently provoked panic among employes there, who called newspapers to report wholesale firings. Darre said reports that the company was dismissing more than 1,200 department managers were inaccurate.

He said the reorganization could mean the elimination of more than 1,200 positions, but this did not necessarily mean the dismissal of 1,200 workers. Some will be transferred to other jobs with the company, though not necessarily at the same level or in the same store, he said, adding that no decision had been made about any Ward's employes in the Washington-area stores.

News that Ward is trying to trim its payroll and cut out unprofitable departments came as no suprise to retail industry analysts. "The company is in serious financial difficulty," said Monroe Greenstein of Bear, Stearns & Co. "Their deficits are horrendous." He said it would take several years to turn around a company the size of Montgomery Ward, an assessment shared by other retail industry analysts.

Cumbersome organization of its retail units, stodgy sales techniques and overstaffing are only a part of the problems that have brought hard times at Ward's. Industry experts and Ward's competitors also have cited the company's relatively heavy burden of high-interest debt, its heavy commitment to cities in the recession-ravaged Midwest, especially Detroit, and its poor choice of suburban store locations.