It would appear that the retailer giant, Wal-Mart, is ending its attempt to move into upscale apparel and other items, with the company's top apparel manager who was in charge of this transition resigning last week. This event has been followed by a massive price cutting campaign on over 16,000 items, including apparel, with cuts ranging from 10 to 50 percent and is being assisted by a new ad campaign aimed at the back-to-school shopper.

One of the advertisements focuses on a 50 U.S. dollar budget and the ability to buy a week's worth of school clothing. With most apparel prices at the factory level rising, it is not clear how Wal-Mart will manage such steep cuts. Clearly, some products are aimed as loss leaders, with one popular school supply product being sold below actual cost.

It remains to be seen if this strategy will allow Wal-Mart to revive lagging same-store sales. For global apparel manufacturers supplying the world's largest retailer, it will mean a loss in profitability. It could also cause Wal-Mart to shift more apparel sourcing away from China to Bangladesh, Vietnam and Cambodia.