I think their problem with fabric is that it's a department that almost has to have a dedicated worker to cut fabric and keep things stocked and straight...and they just don't have those anymore. Almost all Wal-Mart employees are now all-store-trained so that they "float" around the store, working everywhere. Any time I buy fabric in Wal-Mart now, I'm tempted to cut it myself. I'm also sometimes tempted to tidy their fabric shelves because they are always a mess.
As limited and limp along as it is, I hope they don't remove fabric from our stores (they did remove the large fabric department with dedicated clerks from one store years ago and then brought it back, greatly reduced in size).