By Jason Simpkins
Wal-Mart Stores Inc. (WMT) has announced that H. Lee Scott Jr., 59, will be stepping down as the retail giant’s chief executive officer, effective Feb. 1. He will be succeeded by Michael “Mike” T. Duke, 58, head of the company’s overseas operations.
The announcement surprised some analysts, both in terms of timing and selection. Management changes are typically made at the beginning of the fiscal year, which in Wal-Mart’s case, isn’t for another two months.
The selection of Duke also surprised some analysts who expected the job to go to Eduardo Castro-Wright, the president and chief executive of Wal-Mart’s U.S. retailing operation. After all, Scott himself credited Castro-Wright with introducing $4 prescriptions, discounts on DVD players and flat-screen televisions, and a number of other merchandising improvements that helped turn struggling U.S. sales around.
However, Castro-Wright, 53, was promoted to vice-chairman, effective immediately, and will likely get his turn in due time. For now, leadership will pass to Duke, who has been with Wal-Mart since 1995, and served as executive vice president of administration, executive vice president of logistics, senior vice president of logistics and senior vice president of distribution.
Duke is currently head of the Wal-Mart’s international division, which goes a long way toward explaining his ascension. International expansion will pay a very large part in Wal-Mart’s future growth, and under Duke’s stewardship the company’s global presence has grown markedly.
Duke said in June that overseas revenue could eclipse $100 billion for the first time in the fiscal year that ends Jan. 31. International sales, which account for about one quarter of the Wal-Mart’s business, totaled $90.6 billion in 2007.
International sales could jump 9.3% in the year starting February, easily outstripping the projected companywide increase of 5.5%, Morgan Stanley (MS) analyst Gregory Melich said in an Oct. 30 note to clients.
“I’m glad it’s [Duke],” Joe Feldman, an analyst with Telsey Advisory Group LLC, told MarketWatch.com. “He's done just about everything you can do for Wal-Mart. He's a good retailer. He's the right guy for the job now. It's his time and he deserves it."
News and Related Story Links:
Wal-Mart taps Duke as CEO in surprise move