Inside This Issue - News
Guard set to change at Walmart
December 9th, 2013
BENTONVILLE, Ark. – Walmart has named Doug McMillon to replace Mike Duke, who is retiring as president and chief executive officer, effective February 1.
Duke will continue to serve as chairman of the executive committee of Walmart’s board of directors and will serve as an advisor to McMillon for one year.
McMillon, who currently is president and CEO of Walmart International, has been elected to the Walmart board, effective immediately. "This leadership change comes at a time of strength and growth at Walmart," said Rob Walton, chairman. "The company has the right strategy to serve the changing consumer around the world, and Doug has been actively involved in this process. The company has a strong management team to execute that strategy."
Jim Breyer, former lead director on the Walmart board, told Bloomberg News that Duke, 63, had informed the board earlier this year that he wanted to retire. The board consequently launched an executive search about six months ago, initially including outside candidates.
In selecting McMillon as Walmart’s fifth CEO, the board picked a longtime company veteran and Arkansas native who first worked at Walmart in 1984 as a summer associate in a distribution center. While studying for an MBA degree, he rejoined the company in 1990, working in a Tulsa Walmart.
Despite his longevity with the retailer, McMillon, 47, is the youngest person to hold the CEO post since founder Sam Walton. He has long been considered a strong prospect to take the position someday, and is said to be favored by members of the Walton family, which now owns close to half of the company’s stock.
McMillon took the reins at Walmart International in February 2009, after serving as president and CEO of Sam’s Club since 2006. Much of his 23-year career has been spent in merchandising positions within the Walmart U.S. division, including stints in food, apparel and general merchandise. He has also held merchandising positions in both Sam’s Club and Walmart International.
Analysts and industry observers consider McMillon’s broad background in all major operating segments of the company a major asset as he confronts a variety of challenges, not all of which are related to performance. Performance is, nonetheless, a concern as the Walmart U.S. division struggles to re-ignite sales growth after three consecutive quarters of declining comparable-store sales and customer traffic.
Sales and profit growth has also cooled considerably in the international division, which has been Walmart’s main growth driver in recent years. During his tenure at International, McMillon has been focused on improving returns on investment within the segment, as well as implementing Walmart’s fundamental operating principle of everyday-low prices based on everyday-low cost operation in key markets such as Brazil and China.
Beyond those hurdles, McMillon will confront Walmart’s ongoing and long-standing labor problems as it continues to draw fire for its wage and benefits policies. In addition, Walmart remains under the shadow of a large-scale investigation by the Department of Justice and the Securities and Exchange Commission of allegations that company directors were aware of bribes paid by Walmart officials in Mexico to facilitate store building permits.
Moreover, the investigation may extend beyond practices in Mexico to include Brazil, China and India.
Duke succeeded H. Lee Scott in the top spot in 2009, after serving as vice chairman, with responsibility for the international division, since 2005. He is credited with putting in place stronger financial disciplines to improve investment returns as well as investing in technology and executive talent to drive future growth across multiple channels, including online retail.