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Wal-Mart stops selling Egyptian cotton sheets made by India's Welspun

Shopping carts are seen outside a new Wal-Mart Express store in Chicago July 26, 2011. REUTERS/John Gress/Files - RTSEZP9

CHICAGO (Reuters) - Wal-Mart Stores Inc (NYSE:WMT - News) on Friday said it will stop selling Egyptian cotton sheets made by Welspun India (:WLSP.NS) after the Indian manufacturer was unable to assure them the products were authentic.

Last month, U.S. retailer Target Corp (NYSE:TGT - News) severed ties with Welspun after accusing them of passing off cheap sheets as premium Egyptian cotton for two years.

"Welspun has not been able to assure us the products are 100 percent Egyptian cotton, which is unacceptable," Wal-Mart said in a statement. The company will pull the products from its stores and website.

Wal-Mart said it will not cut ties with Welspun but will work with them to implement strong controls and better label the products. The retailer will offer customers, who purchased the products, a full refund.

Egyptian cotton is prized because the length of the cotton fibers are longer, resulting in a finer, lighter more durable fabric and longer-lasting, higher-end clothing.

(Reporting by Nandita Bose in Chicago; Editing by Himani Sarkar)