Handleman Company is exiting the music business in North America.

As part of a radical upheaval of its interests, the company has sold its music inventory and selected other assets related to its Wal-Mart business in the U.S. to Anderson Merchandisers, L.P., of Amarillo, Texas.

Handleman has also reached a deal to sell substantially all of the assets and operations of its Canadian subsidiary to Anderson. Canadian regulatory approval is required to green light that agreement, a result on which is expected in the near future.

In a statement issued today, Handleman said the decision was a "major step in its continuing efforts to address the rapid and fundamental changes under way in the music industry," an action that will also see approximately 260 staff positions cut over the next several weeks.

"Our decision to exit the North American music business was difficult but unavoidable," comments Albert A. Koch, president and chief executive of Handleman, in a statement. "CD music sales have been declining at double-digit rates for several years both industry-wide and at our customers' stores, resulting in a sharp drop-off in our business. Unfortunately, even the significant steps we've taken over the past two years to reduce our costs have not enabled the company to return to profitability."