RICHMOND, AUG. 16 -- James River Corp. today unveiled a major restructuring of the paper company, including the sale or shutdown of specialty operations that have annual sales of $1.3 billion but disappointing profits.

The announcement, made at the company's annual shareholders meeting, comes at a time when paper prices worldwide are slumping and the price of paper company stocks are lagging behind the stock market generally after strong run-ups during the late 1980s.

James River shares, which had traded as high as $32.50, closed today in New York trading at $22.87 1/2, down 25 cents.

The company said it plans to use cash from operations that are sold to reduce debt and repurchase up to 8 million shares of company stock -- a step often taken by companies to bolster support for their stock price.

In explaining its moves, the company said it hoped to focus its energies and capital on areas of the paper industry in which it enjoys a dominant position and that are less susceptible to the economy's ups and downs. Although the company also said it anticipated that the restructuring would improve its balance sheet, Standard & Poor's Corp., the credit rating agency, immediately announced it had put some James River notes on its credit watch with negative implications, citing costs associated with capital expansions and stock repurchases.

The restructuring, to be completed within a year, will allow James River to focus attention and investment on four core areas: towels and tissues, Dixie food service products, food and consumer packaging and communication papers.

James River, based in Richmond, manufactures pulp, paper and plastic products. Sales for the fiscal year ended April 29 were $6 billion, up from $5.87 billion in 1989. Profits fell 13 percent, to $222 million from $255 million.