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 Doug McMillon, head of Wal-Mart's international division, will
succeed CEO and President Mike Duke, 63, when he steps down on Feb 1
after five years in those roles. McMillon, a 23-year company
veteran, will become the fifth CEO since Wal-Mart's founder Sam
Walton.
The change at the top is indicative of a recent shift in strategy at
the company best known for its cutthroat pricing and big box stores.
McMillon, 47, is expected to infuse a youthful spirit into
Wal-Mart's culture at a time when the company is trying to reinvent
itself to attract a generation of shoppers who gravitate toward
tablets and mobile devices.
The move also is a testament to the company's continued focus on its
international division. McMillon, who started at the company in 1984
as a summer intern, left and came back in 1990 to work at Wal-Mart
store before holding several jobs, including a three-year stint as
president and CEO of the Sam's Club division.
But in February 2009, he succeeded Duke to head the international
division, which accounted for 29 percent of its $466.1 billion in
annual net sales in Wal-Mart's latest fiscal year. In that role,
McMillon has been expanding Wal-Mart's everyday low prices to Brazil
and China, while trying to boost profitability by closing some
stores in those countries.
"This is a very natural progression," said Brian Sozzi, CEO and
chief equities strategist at Belus Capital Advisors. "Wal-Mart's
engine of growth has been international."
McMillon and Duke were not immediately available for comment.
McMillon faces challenges. Wal-Mart is seeing its low-income
shoppers in the U.S. struggling with stagnant wages and rising
costs. At the same time, Wal-Mart faces fierce competition from
online competitors and dollar chains that offer convenience and
lower prices.
The company also has image problems. Wal-Mart is being pressured to
further increase its oversight of factory conditions abroad
following a building collapse in April in Bangladesh that killed
more than 1,127 garment workers. And it continues to face criticism
over its treatment of its hourly workers.
Additionally, allegations of bribery in Wal-Mart's Mexico operations
that surfaced in April 2012 have slowed business overseas. Wal-Mart
allegedly failed to notify law enforcement that company officials
authorized millions of dollars in bribes in Mexico to speed up
getting building permits and gains other favors.
The New York Times, which broke the story, reported that Wal-Mart
officials, including Duke, were allegedly informed starting in 2005
about the bribes. McMillon was not linked to the incident because he
wasn't working in the international division at the time.
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Dave Tovar, a Wal-Mart spokesman, told The Associated Press that
Duke's decision to leave Wal-Mart was "a personal one," and had
nothing to do with the bribery allegations. "He decided it was time
to retire," said Tovar, who added that Duke approached Walton and
the board voted Friday.
Duke became CEO in February 2009 at a time when the retailer's
strong performance made it the rare winner during the Great
Recession. But that soon changed a few months after he took the
helm.
As the economy slowly recovered, times got tough for Wal-Mart,
resulting in a more than two-year slump in its U.S. namesake
business. The company also made mistakes in pricing and
merchandising that backfired.
During his tenure, Duke named a new U.S. executive team, which
reversed the slump in the third quarter of 2011 by restocking
thousands of items that had been ditched and pushing low prices
across the store.
But those gains have been reversed since early this year. The U.S.
Wal-Mart business has posted three straight quarterly declines in a
key revenue metric. Wal-Mart also lowered its annual profit outlook
twice in three months.
Duke will remain as chairman of the executive committee of the
board. In the tradition of his predecessors, he will stay on as an
advisor to McMillon for one year.
Meanwhile, the company said it plans to name McMillon's successor by
the end of its fiscal year in early 2014.
Shares of Wal-Mart rose 63 cents to $80.44 in midday trading.
[Associated
Press; ANNE D'INNOCENZIO, AP Retail Writer]
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