Our local WalMart has closed it's fabric department as it is also remodeling it's store. However, last year, I asked the salesperson in the fabric department if they were going to close and she said no way. I asked her if the fabric from other stores are sent to the stores that still have fabric departments? She said no again. However, she had a bunch of partial bolts to mark and put up that had just come in. This is what she told me, that they had just come in.
So, I would imagine that when a fabric departmentt closes down, the fabric is shipped to another store. You know they aren't going to just pitch the fabric or donate it, don't you?