Wal-Mart Stores Inc is ushering in a changing of the guard as the world’s largest retailer confronts slower growth and challenges to its reputation.
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 is also 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 a Wal-Mart store before holding several jobs, including a three-year stint as president and CEO of the Sam’s Club division.
However, in February 2009, he succeeded Duke to head the international division, which accounted for 29 percent of Wal-Mart’s net sales of US$466.1 billion in its latest fiscal year. McMillon has since 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 faces challenges. Wal-Mart is seeing its low-income shoppers in the US struggling with stagnant wages and rising costs. At the same time, Wal-Mart faces fierce competition from online sites and dollar chains that offer convenience and lower prices.
The company also has image problems. It 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. 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 last year have slowed business overseas. The firm allegedly failed to notify law enforcement that company officials authorized millions of dollars in bribes to speed up getting building permits and gain other favors.