In a surprise announcement, H. Lee Scott Jr., Wal-Mart's CEO, said on Friday that he is retiring, and Mike Duke, who heads up the company's growing international business, will take over on Feb. 1.
Mr. Scott, CEO since January 2000, oversaw a rather rocky period for the retail giant marked by slowing growth partly because store saturation issues finally arrived. He also faced rising criticism over labor practices and even some scandals over the hiring of illegal immigrants, gender discrimination, and a top executive stealing from the company.
But over the last year, Wal-Mart has led the retail pack, posting strong revenue and profits with its renewed emphasis on low prices as well as improved merchandise and expanded marketing. Moves by Mr. Scott over the last three years to bring in outside executives are believed to have helped. Mr. Scott also set up a public relations force to take on critics, and earned wide praise for Wal-Mart's sustainability efforts. The stock is the only Dow Jones Industrial Average component to notch a gain for 2008.
Mr. Duke's 13 years of experience at Wal-Mart includes tenures as the head of logistics as well as stints running its U.S. and foreign operations. As vice chairman of the international division since 2005, he showed a willingness to make tough decisions, including pulling out of Germany and South Korea.
The Wall Street Journal said this experience has made Mr. Duke "the steadiest hand available for the task" according to Wal-Mart's business partners and the company itself.
The New York Times noted that his international experience was critical since it's an area expected to drive Wal-Mart's growth. Additionally, Mr. Duke's experience working for Federated Department Stores and May Department Stores for more than two decades could be useful as the chain works to fix its apparel business. Bloomberg News said his logistics experience particularly provided solid qualifications for the job.
While Mr. Scott faced his own challenges upon becoming CEO, The Journal noted that Mr. Duke will be challenged with steering the discounter through the current global economic turmoil. Internationally, Wal-Mart is pursuing riskier expansion in emerging markets such as Brazil and China. With supercenter expansion slowing in the U.S., Mr. Duke will oversee a massive remodeling effort to hold on to recently improved traffic.
"When the U.S. economy improves, Wal-Mart's biggest challenge will be to retain these new customers and show that it's more than a cyclical story benefiting from a bad economy," John McMillan, an analyst at Lord, Abbett & Co., told Bloomberg News.
Discussion Questions: First, what do you make of the legacy of H. Lee Scott Jr. as CEO of Wal-Mart? Second, what do you think of the hiring of Mike Duke as the new CEO?