MISSISSAUGA, Ont. - Wal-Mart Canada is shutting down its Sam's Club stores in southern Ontario next month, affecting 1,200 jobs, in an uncharacteristic retail failure for Canada's largest department store operator.

Wal-Mart, which owns 312 stores across the country and employs 80,000 people, says the move will allow the company to focus on its supercentre outlets and discount stores as the economy worsens and consumers become even more price conscious and focused on convenience.

Sam's Club has been in Canada for only about five years. The store has a members-only warehouse format similar to that of the much larger Costco chain, and Wal-Mart Canada president and CEO David Cheesewright said the stores didn't perform to the company's standards.

"Despite our best efforts and the commendable work of our Sam's Club associates, our six clubs have not met our expectations," Cheesewright stated.

The company said Thursday it will try to minimize job losses among the stores' 1,200 employees by holding internal job fairs to help them find employment at existing Wal-Mart stores.

The Sam's Club stores slated for closure are in Toronto, surrounding communities of Pickering, Vaughan and Richmond Hill and in southwestern Ontario cities of London and Cambridge.

The announcement followed news earlier this month that the giant retailer would cut 700 to 800 jobs at its Bentonville, Ark., headquarters in the United States.

Canada's retail industry has been suffering from declining sales as the economy worsens, forcing companies to streamline to deal with the weaker environment.

Hudson's Bay Co. announced earlier this month that it will cut 1,000 Canadian jobs, or about five per cent of its full-time workforce, while Sears Canada recently laid off 300 employees.

Wal-Mart Canada said it is in discussions with "a major U.S. retailer" to purchase all of the Sam's Club locations except the one in Cambridge.

The retailer also said it plans to open 26 new Wal-Mart supercentres in Canada this year, including expansions of existing stores, relocations, and new stores.

"Customer response to our supercentres has been very strong," said Cheesewright.

"Today's announcement will allow us to focus our resources on growing this popular one-stop format at a time when Canadians are relying on Wal-Mart more than ever to help them save money during challenging economic times."

Wendy Evans, head of retail consultancy Evans and Co. Consultants Inc., said the supercentres, which offer customers one-stop shopping for various goods and services, have proved they generate good financial returns for Wal-Mart.

"I think they've found it to be a very successful concept, and if you can optimize your opportunities in one concept rather than another, then you're better putting your resources in that direction," Evans said in an interview.

"They're putting their money where the profits are."

More and more retail companies are looking to fulfil growing consumer demand for true one-stop shopping by adding a variety of consumer goods to their traditional wares.

Canadian Tire (TSX:CTC.A) opened two "smart stores" in Ontario in November. The stores offer an expanded variety of food and grocery staples, such as bread and milk, as well as an increased selection of other products.

Meanwhile, Shoppers Drug Mart (TSX:SC) has described its Nativa Organics line of food as "the biggest success of any kind of product label we have." Some grocers, such as Loblaw Co. (TSX:L) and its Real Canadian Superstore outlets, have moved in the opposite direction and now sell clothes, cosmetics, furnishings, pharmaceuticals and other non-food items.

Wal-Mart Canada said the supercentre expansion is expected to create 5,000 new store jobs as well as 5,000 construction jobs.

The additions will bring the total number of Canadian supercentres to 82 and Wal-Mart Canada's overall store count to 316 by the end of the year.