After its venture into more upscale apparel turned into a spectacular fashion flop last year, Wal-Mart Stores Inc. is attempting to get all dressed up again.

Despite the discount retailer's assurances that it had returned to its roots of selling the most basic clothing — T-shirts, tank tops and tube socks — it has been striking deals to bring in new brand-name designers and apparel. Among them: the once red-hot Norma Kamali, known for jersey-draped dresses, sleeping-bag coats and ensembles made from gray sweat-shirt material, who is creating a clothing line for Wal-Mart that will debut in the fall.

Wal-Mart also has signed deals with California surfer brand Op and Jones Apparel Group's junior jeans line l.e.i. As part of its new fashion push, Wal-Mart restructured its apparel division in February, transplanting a big chunk of the operation to New York. The move led to layoffs at its Bentonville headquarters.

The world's largest retailer has tried for years to muscle into the cutting-edge fashion business. Two years ago, it showcased new offerings in conjunction with New York's fashion week, took out elaborate advertising spreads in Vogue magazine, and opened an office in New York City so staffers could stay on top of trends.

But its big dive into more fashionable, higher-price apparel alienated Wal-Mart's loyal core customers. The George Collection's tailored tweed skirts and knit sweaters — designed by Mark Eisen — were priced in the high $30s and out of reach for most of the stores' shoppers. And when Wal-Mart expanded its trendy new clothing line Metro 7 into 1,500 stores from its initial 500, customers didn't rush to snap up skinny-legged jeans and leopard-print tops. Sales sagged and overstocked inventories drained earnings last spring, and longtime apparel chief Claire Watts resigned.

Now Wal-Mart is wading back into the fashion arena, learning from its mistakes in order to restyle its strategy with an emphasis on both fashion and quality at a low price. It's a tricky time to try, with the weak economy slowing sales of discretionary items like fashion apparel.

Rival Target Corp., which pioneered low-cost designer clothing, recently announced it was ending its longstanding partnership with designer Isaac Mizrahi, who was named creative director at Liz Claiborne. The designer's clothing and accessories account for about 3 percent of Target's apparel revenue, but analysts blame part of an overall slowdown in sales on brands that have lost their individual identity.

Apparel remains attractive to Wal-Mart for a number of reasons. As the company builds fewer stores, it needs to propel sales and earnings growth by wringing more profitable sales out of its existing stores. Higher fashion apparel and bedding have higher profit margins than other merchandise — about 31 percent, a full 10 percentage points higher than almost every other category the discounter sells, according to estimates from Sanford C. Bernstein & Co.

Wal-Mart isn't ready to discuss details of its new apparel strategy, saying it is still a work in progress. It's particularly worried about overpromising and underdelivering to shareholders, as it did previously, a person close to Wal-Mart says.

But the heart of the discounter's new strategy appears to be an effort to return to its roots, with a strong focus on selling more everyday apparel. The program is the brainchild of new apparel chief Dottie Mattison, who, before heading merchandise at Walmart.com in 2006, was an executive at Gap Inc. She has brought along many of her Gap colleagues to staff Wal-Mart's new apparel office in New York.

At the company's annual meeting with analysts this fall, executives labeled the back-to-basics program 10-10-10. The concept: Stock a basic apparel item in 10 sharp colors, with at least 10 each in stock, selling for less than $10. The system debuted in stores in October and already is racking up double-digit sales increases.

More fashion-forward styles are relegated to the juniors section, which is now in the more visible areas of the store once filled with Metro 7 and George. And all lines seem to have a fair share of basics — T-shirts and solid tops with cardigans — that emphasize the product's low price and quality.

"They are finally embracing who they are," says Adrianne Shapira, retail analyst at Goldman Sachs. "Not everyone can beat (Target) at their own game."

Wal-Mart is bulking up on brands, too, such as Hannah Montana merchandise and baby apparel by Garanimals. For the back-to-school season — the next big selling season for retailers — Op, the casual-wear brand that was popular as Ocean Pacific in the 1970s and '80s, is relaunching exclusively at Wal-Mart. The line, which will feature clothing, footwear and accessories in the juniors and young men's categories, hits stores in August, but the label is beginning its big marketing push now. For the relaunch, Iconix Brand Group Inc., which owns Op, has created the label's most star-studded ad campaign so far. The ads will appear in magazines such as Rolling Stone, Lucky and Cosmopolitan beginning in May. In these ads, stars such as Kristin Cavallari and musician Pete Wentz are shown engaging in everyday activities — riding bikes or romping in the surf — to play up the casual accessibility of the clothes.

"The relaunch is about making a classic American brand accessible to as many people as possible," says Dari Marder, chief marketing officer at Iconix, explaining the decision to launch at Wal-Mart and also use mainstream TV or pop stars.

Wal-Mart is also trying to make its apparel departments more appealing, improving signage and reducing clutter. "You used to need a machete to get through the aisles," Ms. Shapira says.

Analysts say they believe Wal-Mart will join other discount retailers in using Hong Kong-based apparel manufacturer Li & Fung to make at least some of its private label or licensed apparel brands, as many other discounters do. While they may lose some margin by employing a middleman, an expert in this area can help avoid costly mistakes and will take back product that doesn't sell.

In a recent interview, Wal-Mart Chief Executive Lee Scott said that while Wal-Mart wouldn't outsource all of its apparel to the manufacturer, "There is a place at Wal-Mart for Li & Fung."

One of the biggest risks Wal-Mart is taking is the partnership with Ms. Kamali, whose line of women's wear will debut in about 350 Wal-Mart stores this fall. She has a long-term contract through apparel licensing agent and manufacturer Cherokee Inc. and plans to branch into children's clothing, accessories, footwear and home furnishings.

Her high-end line sells at stores ranging from Nordstrom to Bloomingdale's, as well as her own boutique in Manhattan, where she also plans to sell items she designs for Wal-Mart. But some of her other recent attempts to broaden her clothing's appeal have been short-lived. She designed a collection for the Spiegel Catalog, called Norma Kamali Timeless, and a contemporary collection for Jacque Moret Inc.'s Everlast division. Both have been phased out, the latter after three years.