Wal-Mart Merchandise Strategy: Gambling With CMO?

(Wal-Mart article updated with additional analysis.)

NEW YORK (TheStreet) -- Wal-Mart(WMT)is opting not to hire a new chief merchandising officer, for now, instead naming four new heads of product to adopt these responsibilities.

The discount behemoth sent around an internal memo to employees earlier this month outlining its strategy for merchandising.

Recently appointed CEO Bill Simon said Wal-Mart has created four core merchandising areas around general merchandise and replenishment, food, softlines, and consumables, health and wellness, as well as Walmart.com. John Westling, Jack Sinclair, Andy Barron and Duncan MacNaughton, will head up those divisions, respectively.

"This structure aligns similar categories and allows us to be even more competitive in each customer channel, improving how we target and localize merchandise," Simon wrote.

The former head of merchandising, John Fleming, stepped down on Aug. 1, after serving the company for 10 years. The move came shortly after Simon was appointed the new CEO of the U.S. division.

The move to hold off on naming a dedicated chief merchandising officer may come as a surprise to some investors, as Wal-Mart has been grappling with its sales. The retail giant has now posted five consecutive quarters of declining U.S. same-store sales, and may continue that downward trend in its third quarter.

"We hoped Walmart would look externally for a new chief merchant given the problems with recent top-line strategies," J.P. Morgan analyst Charles Grom wrote in a note.

For 2010, at least, this decision reflects that Wal-Mart is throwing in the towel, "essentially focusing on price instead of trying to do a sweeping overhaul," Wall Street Strategies analyst Brian Sozzi says.

There is clearly a debate on what exactly to do with some of the discretionary categories, specifically apparel. "Apparel is not where we want it to be, but it is an opportunity for us," chief financial officer Tom Schoewe said on a call with reporters after its second quarter earnings report.

Wal-Mart attempted to boost sales this summer with aggressive price rollbacks, but the company said that initiative did not achieve the desired results. Schoewe blamed the economy, saying customers are under such severe pressure that even dramatic discounts are not enough to entice spending.