Mike Duke, Wal-Mart CEO

NEW YORK — Wal-Mart Stores Inc., the world's largest retailer, unexpectedly announced Friday that its chief executive will retire in February and be replaced by the head of its international division.

The surprise change in leadership right before the crucial holiday season comes as Wal-Mart has roared back to success as people looking for bargains shop more at discounters. Still, the company faces hurdles ahead amid slowing growth in the U.S., and analysts say the decision to tap an international executive serves as a testament that the company sees its future growth oversees.

Bentonville, Ark.-based Wal-Mart said Mike Duke, 58, vice chairman of its international division, will take the reins from Lee Scott, 59, effective Feb. 1. Duke also becomes a member of the board of directors immediately.

Scott, who joined Wal-Mart in 1979 and became president and CEO in 2000, will continue as chairman of the executive committee of the board until January 2011, according to Wal-Mart spokesman Dave Tovar. He will also serve as an adviser to Duke until 2011.

During his tenure, Scott faced increasing scrutiny particularly from union-backed groups over issues from environmental concerns to wages and health care, which critics say have been too skimpy. The negative publicity had depressed the company's stock price for two and a half years and made the company the poster child for bad corporate behavior.

But Wal-Mart's overhaul of its stores and merchandise and its re-emphasis on low prices came together at a time when the economy began to turn sour last year. Since September 2007, Wal-Mart's shares have made a remarkable comeback and its image has improved as the company, under Lee's leadership, implemented environmental sustainability efforts, a discount drug program for customers and other initiatives.

"The absence of (Scott's) steady hand, leadership, and political clout will be a minus for the company as his strategic decisions ultimately brought the company back to its roots and raised its public relations profile," wrote Adrianne Shapira, a retail analyst at Goldman Sachs in a note released Friday. But she praised Duke's abilities, noting that Wal-Mart's strong fundamentals should ensure a smooth leadership transition as Duke inherits a company in "its sweet spot."

Even in recent weeks, the stock has held up as most company's shares have plunged. Last week, the retailer said third-quarter profit rose 10 percent as shoppers snapped up early Christmas promotions.

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Tovar said the decision to name Duke was part of an "ongoing rigorous succession planning process."

"We think the right time is now, a time of strength and momentum for the company," Tovar told The Associated Press. "Our strategy is sound, and Mike has been integrally involved in developing and executing the strategy."

He added, "with all of this in mind, Lee decided the time was right for him to retire and approached the board about doing so."

Wal-Mart shares rose $2.26, or 4.5 percent, to close at $52.92 on the news Friday.

Some analysts found the timing puzzling, while others said the change may be necessary to put a new face on the company to deal with a new U.S. government.

"The thing is, Wal-Mart is doing well, so why change now, especially as we head into a long recession?" said Gerard Roche, senior chairman of executive recruiter Heidrick & Struggles International. "We are facing a critical holiday season when maximum leadership is called for."

David Nassar, director of the union-backed group Wal-Mart Watch _ which has been pushing for Wal-Mart to make changes to its business practices _ said he did not think the change could be divorced from the broader political backdrop.

Wal-Mart faces some challenges ahead with the administration of President-elect Barack Obama, who has pushed for the passage of the Free Choice Act, legislation that makes it easier to unionize workers. Scott told investors in October that he believes unionization could harm corporate America's competitiveness, but had said that he was looking forward to working with a new president and Congress, regardless of party, to find solutions to big economic challenges.

"Mike Duke as the new chief executive officer must be viewed in the context of the recent election," Nassar said. "It represents an opportunity for Wal-Mart to change from the low-wage, low-benefit business model to one that will be more appealing to an Obama administration."

More importantly, the change is also a testament to the importance of Wal-Mart's international operations as "chief driver" of future growth, wrote Shapira.

The international business is its fastest-growing division, and profit rose 11 percent during the quarter, while U.S. profit rose 7 percent. Last month, the company announced that it's shifting more of its focus over the next five years away from mature markets and to emerging markets like Brazil and India to drive sales.

Duke, who joined the company in 1995 and has served in posts including president and chief executive of the Wal-Mart Stores division in the U.S., "understands retail and appreciates the complex global environment in which we operate," said Rob Walton, Wal-Mart's chairman.

Before joining Wal-Mart, Duke was an executive at Federated Department Stores and May Department Stores, which are now known as Macy's Inc., for 23 years.

Wal-Mart also announced that Eduardo Castro-Wright, 53, was promoted to vice chairman, and cited his international experience. He will take over the company's global procurement operation, adding to his current titles of president and chief executive of Walmart U.S.

___

AP Retail Writer Mae Anderson contributed to this report.

Comments

[Bitsko]

Mike Duke. Now there's a good solid American worker-exploiting union-bashing name for ya.

[sueinmn]

Whats really sad is that retailers like walmart do not pay a living wage or benefits yet these retailers expect US to be their consumer base. All these american retailers need to realize somewhere down the road if they do not create american jobs with a living wage, there will be no customer base to sell their merchandise to. Imported autos are piling up by the thousands at shipping ports and what good does it do to continue importing them if people cant afford to make the purchase. So the cost of storing them adds to the price and reflected back to the consumers when they are purchased. American manufacturing cannot compete against the $2/hr slave labor in other countries. If American cannot produce or manufacture again we cannot survive as a society. Trade agreements must go and loopholes to encourage businesses to go overseas must be closed. Bottom line is American consumers cannot consume much more with out job creation and living wages. Americans once were appalled at the $2.00 types of labor and once stood strong against it. When did our moral beliefs change and now we look at becoming a nation of such to compete if this continues. American business had better realize what their greed has done as we become poorer, so shall they.

[sueinmn]

So shall the American consumer! Soon the only choice will be walmart as they drive other business out. Sure you get more for your money even less quality! your jobs may be the next hit and then what? the snowball just keeps growing. Be willing to pay a littlemore to help keep american jobs (what few are left). Our entire mentality needs to change. Can you go with out things for awhile to send a message? This holiday season is a great time to send that message! Buy less if not by nessessity, by choice! Make a personal attempt to support a local store, ma pa type. Look at the store closures set for after the holiday season, their are many! These big chains arnt making it which is grat for ma pa locals if they can manage to hang on with your support! WE HAVE TO CHANGE TO SURVIVE, WEAK COUNTRIES ARE OVER POWERED. China becomes stronger and we are in huge debt to them. Americans have before always been a leader in giving money and politically behind this is who gives the most can then have much control over that country. Do we want China to eventually dictate to us? We could be slipping into being a civilized third world nation. Do we have what it takes to come back and be a viable nation? We must have the means to produce and be gainfully employed to do so. BOYCOTT the bigbox!
DO YOUR PART

[Paul]

Hey Mike Duke!

Be sure to keep treating your employees like crap. When they get sick, be sure to give them directions to the nearest hospital emergency room so the rest of us can pay for their healthcare.

Wal-Mart is the poster boy for socialized medicine and we need you to keep up the pressure.

[jake106]

http://walmartstores.com/Careers/7750.aspx

Do you even have an idea of what the benefits are for a Wal-Mart employee?

[sueinmn]

Generally if you apply at walmart you have hit the bottom of the barrlel. The lawsuits against this company nation wide for unfair labor is tremendous. This would be a good example of the new "card check" law when implemented! Could they fire the entire emplyee lot at once? Get a few with a backbone and show this company, NO MORE, WE WANT OUT FAIR SHARE!! They could do this!! I sat in line one night all night for a laptop and the lady ahead of me was in a wheelchair. the department manager decided to play games and refused to say where they would sit up the sale come 8AM. This poor wheelchair bound lady felt really bad as knowing she was first in line and according to the department manager, she would not have a chance to purchase. WE all spoke up and told this manager this was simply a poor example of managing and she would be encouraging a mad stampede and if someone was to get hurt, well she would be held accountable and be all over the media! She backed off but these are types of people they like to hire. INCAPABLE MISFITS TO SOCIETY! Bottom of the barrel of unqualified workers is what this country is promoting with substandard wages. Yet people hurry to spend what they can there. Im proud to be American but not for much longer as what we have become. Greedy, spitefull, bullyish ignorant people. Makes ya prowd huh.

[marbou]

I'm surprised that Walmart did not pick a Chinese as CEO. After all, everything else in their stores comes from China.

[rabiddog6708]

No angel born in hell could break the devil's spell.

[Paul]

While we sang dirges in the dark.

[dotsthefunist]

The small Ma & Pa stores that are getting boarded up had stocks holders called the community ,the dividends were in the form of people helping people .
We progressive liberals may be the real conservatives wanting to conserve that dream of starting a small business where the employees learned about business .

[Garrett123]

Boycott WalMart and remind everyone you know to do the same.

This company is the poster child for the ills of our country.

[SinisterK9]

Yeah. Let's boycott Walmart. Hopefully we can get all 2.1 million employees fired. That will teach the economy a thing or two.

To put Walmarts employees into perspective, If you closed down General Motors 4 times, you would still only be about half way to Walmarts employees.

[Tunghoy]

The point isn't to put Wal-Mart out of business, it's to put enough pressure on them to clean up their business. Stop forcing employees to work off-the-clock, stop paying poverty wages, stop violating the Fair Labor Standards Act, stop discriminating against women and minorities, provide health insurance (right now it's the taxpayers who pay for their employees' coverage), stop driving down communities' wages, stop treating Chinese factory workers like dirt........I could go on and on, but you get the point.

And keep in mind where many of Wal-Mart's employees come from: employees and owners of locally-owned stores that go out of business when Wal-Mart moves in. If there were fewer Wal-Mart stores, there would be more local stores who would employ the same people.

I'm proud of not having set foot in a Wal-Mart for 5 years, even though there are 2 of them in my area. For more info, go to www.WakeUpWalMart.com.

[LMPE]

I've never been inside a Wal-Mart store in my entire life. I can identify little known actresses Connie Hines and Dorothy Provine. I've been in Verkhoturye, Russia, and swum in an aqua-park near Riga, Latvia. But never once have I set foot in a Wal-Mart supercenter. And I hope that it stays that way.

[vew]

I wish I could say the same, but living in a small town makes it difficult. Walmart has caused many of the smaller stores to close and the only option is to drive many miles to another town to shop. For people on small incomes who need to save gas, the nearness and low prices at Walmart are too hard to pass up. We go to the small "mom & pop" stores in the area as much as we can. But sometimes the only place to get an item we need is to shop Walmart. So the American consumer is in a Catch 22 about Walmart. When we lived in a larger city we never shopped at Walmart- too many options for buying goods there. And don't forget the wholesale part of Walmart, Sam's Clubs, where small businesses in small towns/rural areas can buy paper products, etc, in quantity and save money. The issue with Walmart is not just low benefits and pay for its employees but the competition it had given to small businesses that can't compete with its price structures. It almost has a monopoly in small town America.

[sandiegoconservative]

You must be a fake liberal. Congratulations!

[TotoToo]

I haven't shopped at Walmart in eons. They are a criminal enterprise that exploits entry level workers, actually handing out applications and "How to Apply for Welfare" pamphlets to their low pay (slave) workers. The Waltons are worth $5 billion EACH and Lee Scott made $31.6 million in 2007. His golden parachute will be insultingly huge, plus he'll make millions in stock dividends every year because idiots who don't care about how workers are treated shop at Walmart.

When you shop at Walmart you put working class people on welfare.

[feo]

Maybe the Walton family members can stop sitting on their combined $81 billion and shell out for some health care.

[jesther]

Shopping at Wal-Mart is economic suicide.

[Tom95134]

And if you don't believe it just watch this http://www.pbs.org/wgbh/pages/frontline/shows/walmart/

[TravelinMan357]

I am boycotting Wal-Mart, and Home Depot. I will also look to see who advertises for Fox News and boycott them too.

[vietveter]

Wal-Mart has a new, fresh opportunity to 'do the right thing' in the way they treat their employees.

America's biggest [by far] retailer could be seen as part of the solution, not part of the problem, if they would bend a little to treat their employees as employees and not slave labor.

Pull your head out of your bottom line

Do "THE RIGHT THING"

[mandycat]

But Wal-Mart is already doing the right thing. It's just not the right thing for anyone who isn't a Wal-Mart executive, a member of the Walton family or a small town politico standing in line for a kickback in exchange for tax breaks and zoning changes. Breaking labor laws, discriminating against women, bullying suppliers, leaving abandoned store buldings for someone else to deal with and skating around environmental regulations have all paid off very well indeed for these people. Why would they change such a successful business model now?

[Erdgeist]

Walmart buys most of its goods from the ChiComs then sells them to partriotic rednecks who are in a race to the bottom in terms of wages. You can see where this is all heading. Talk about another Great Depression! I guess this is what America deserves for being so stupid: for offshoring and labor arbitraging in the name of "free-trade". I am waving my ChiCom made American flag hoping for the Rapture!

[FZliveson]

Erdgeist: I've been to China many times, beginning shortly after the Ping Pong diplomacy opened up commerce with China. The use of the term "ChiCom" proves you to be under the influence of a Marconian narcotic called "Limblaugh." The average Americun doesn't have the slightest glimmer about the workings of foreign governments, especially "commuism," which is largely a term invented by our weaponry manufacturers to justify the perpetuation of the Cold War. China today has many faults, socially and politically, but they are feeding more people, educating more people and growing economically in a fairly free-market environment, than we ever did. ChiCom my butt!

[Bosoxfan]

Mike Duke? Any relation to David? Free hoods at Walmart.