Layoffs and a major shift in business strategy are in store for Handleman Co., the Troy-based media distributor.

Handleman, best known as a music supplier to Wal-Mart, announced today that it’s getting out of the music business in North America.

The company has agreed to sell its music inventory and other assets related to its trade with Wal-Mart — the lion’s share of Handleman’s music business — to Texas-based Anderson Merchandisers, L.P.

The company estimates about 260 layoffs in the US in the weeks ahead, but is expected to retain substantially all of Handleman’s approximately 230 Canada-based employees for the foreseable future. Anderson Merchandisers has no operational base in Canada so whatever rationalization does take place, the cuts are likely to be less deep here.

Handleman has agreed in principle to sell substantially all of the assets and operations of its Canadian subsidiary to Anderson. Completion of that transaction is expected to occur shortly after receipt of Canadian regulatory approval, which the parties expect to receive in the near future.

These moves, according to the statement, come in response to years of double-digit declines in CD sales, President and CEO Albert Koch said in Monday’s statement.

Koch, a vice chairman of Southfield-based turnaround firm Alix Partners L.L.C., took the reins at Handleman last November, after several quarters of net losses.

In March, Handleman posted third-quarter revenues of $346.9 million. Revenues for the same quarter last year were $485 million.

The rack-jobber has about $.1 billion in annual sales, nearly 2,000 employees, over 70 years of distribution experience and represents over 11% of all music sold in the US and over 25% in Canada.

Handleman’s other operations, which are not involved in or affected by the transaction announced today, include Crave Entertainment Group, Inc. (“Crave”), a leading full-service distributor of video game software, hardware, and related accessories and a specialty video game publisher; Handleman UK Limited, a leading UK-based distributor and store merchandiser of books, music, computer games and other products; Artist to Market Distribution (“A2M”), an independent music distributor that works directly with branded artists and artists’ management to streamline the supply chain and deliver new music product to the marketplace at a lower cost; and REPS LLC, a national in-store merchandiser.

Handleman has retained the investment banking firm W.Y. Campbell & Company for the purpose of exploring a sale or other strategic options for Crave.