Duke To Lead Wal-Mart

Scott Announces Retirement; Analyst Says Move Could Signal Global Expansion

Last updated Friday, November 21, 2008 7:29 PM CST in News

By Kimberly Morrison
THE MORNING NEWS

Joe Beaulieu, an analyst with Chicago-based Morningstar Inc., said the selection of Duke could signal Wal-Mart considers international growth a top priority.

"We were mildly surprised by the timing of the announcement," Beaulieu said. "But given Wal-Mart's strong performance this year, we see the logic."

Duke and Scott, 59, both joined Wal-Mart in logistics capacities and have risen through the company's executive ranks. Scott joined Wal-Mart in 1979 as an assistant director in the Logistics Division; Duke entered the company in 1995 as senior vice president of logistics after a 23-year career with Federated Department Stores and May Department Stores.

"I look forward to leading this great company," Duke said.

Duke's 13-year career with Wal-Mart has included roles in logistics, distribution and administration divisions, as well as U.S. store operations. As vice chairman, he has been involved in developing and executing corporate strategy, including settling higher standards of excellence for the company's resources and people. Duke led the redesign of logistics and merchandise distribution systems and recruitment of top management talent.

Although Wal-Mart continues its tradition of promoting company leaders internally, Scott is the last of the company's executives to have served the company under founder Sam Walton, who retired in 1988 and died four years later.

Scott quickly became the retailer's rising star under then-CEO David Glass. He was rapidly promoted through executive positions in logistics, merchandise, U.S. division and operations -- sometimes spending as little as one year in the latest promotion -- before becoming president and CEO in 2000.

He faced turbulent times for the world's largest retailer as it battled a negative public image led by union-backed attack groups, obstacles to domestic store growth and a more complex global environment. Scott found himself in the hot seat with investors after a run of skimpy returns, a series of embarrassing public relations fiascoes and company stock that had fallen 22 percent under his direction.

Scott said in June following Wal-Mart's annual shareholder meeting, in a reflection on his performance in earlier years, that he "felt like I should lose" the board's support if he failed to turn the company around, but wasn't worried he would.

"Lee was dealing with something no one had taken on before," said Michael Bergdahl, the former director of people in the early 1990s and an author of two books on Wal-Mart culture. "It's difficult enough running a company, let alone the world's largest, and then one that has a target on its back."

Scott surprised many in a 2005 speech announcing ambitious initiatives in sustainability, responsible product sourcing, health care and labor issues like wages and diversity. The speech marked the beginning of the company's three-year revival that included a restructuring of key management and divisions, improvements in the store shopping experience, and what the retailer called "a return to profitability."

The retailer since has introduced $4 generic prescription drugs, in-store health clinics and expanded its benefit and bonus program for employees. The company also made strides in its social and environmental practices, introducing renewable energy, reducing waste, selling more sustainable products and establishing a more responsible global supply chain.

"Lee's leadership and accomplishments have been extraordinary both inside and outside of Wal-Mart," said Jeff Schomburger, president of the global Wal-Mart team at Procter & Gamble. "Most recently, the way he has moved an entire industry to focus on sustainability has been incredible."

Scott and Procter & Gamble chief executive A.G. Lafley shared the stage last year at Wal-Mart's sustainability summit and reflected on their progress. Scott said his goal was to stay true to the company's core values, "but change everything else."

After nearly 30 years with the company and a third of that time running it, Scott has left his mark doing just that.

"It has been a privilege to lead the company Sam Walton created, a company that continues to live the mission and culture he established," Scott said. He will remain on the board of directors and be an adviser to Duke for two years.

While Scott has cemented his legacy in the company's second-generation culture, Duke has led the company's international expansion into 14 markets outside its domestic home turf.

In his tenure, the company's international business has become the fastest-growing part of overall operations with more than 3,200 stores and 620,000 associates. The international segment last year accounted for nearly a quarter of all sales and is projected to reach nearly $100 billion this year, according to Wal-Mart.

"It's a really good choice. He's someone who knows the company, but also knows the future of Wal-Mart, which is international," Bergdahl said. "He'll be taking the company to the next level. Lee Scott has done a lot of things right and is leaving a company that is doing rather well."

Duke was expected to be Scott's successor after John Menzer, vice chairman and chief administrative officer, resigned in March. Castro-Wright, another rising star, will assume management of Duke's global procurement operations.

"Wal-Mart succession planning is once again delivering a tremendous leader to the CEO chair in Mike Duke," Schomburger said. "He brings with him a wealth of experience in leadership that will build on Wal-Mart's momentum. The promotion of Eduardo is also very well-deserved and very reflective of the leadership he has brought to Wal-Mart stores."

Shares of Wal-Mart Stores closed Friday at $52.92, up $2.26. For the past 52 weeks, the share price has ranged from a $63.85 high to a $43.11 low.

Timeline

Lee Scott As Wal-Mart CEO

2000

• Scott named CEO of Wal-Mart Stores Inc.

• Walmart.com is founded and headquartered in California

2002

• Wal-Mart enters Japan market with 6 percent stake in supermarket chain Seiyu Ltd.

• Wal-Mart ranks No. 1 on Fortune 500

• Biggest single sales day of $1.43 billion on Black Friday

2003

• Wal-Mart named "most admired company in America" by Fortune Magazine

• Wal-Mart opens a New York trend office to keep tabs on women's apparel

2004

• Company retains top spot on most admired list in Fortune Magazine

• Sam's Club begins installing RFID equipment in 36 clubs

2005

• Wal-Mart assists relief of Hurricane Katrina with $20 million in cash and thousands of truckloads of food and merchandise

• Experimental stores to save energy, conserve resources and reduce pollution are introduced in McKinney, Texas and Aurora, Colo.

• Investigation into recently retired executive Tom Coughlin reveals he stole some $500,000 from the company

• Wal-Mart enters Central American market with 33 percent stake in CARHCO from Ahold

• Sam's Club begins RFID pilot with top 100 suppliers

• Wal-Mart acquires a majority interest in Seiyu, making it a Wal-Mart subsidiary

2006

• Stake in CARHCO is raised to 51 percent and name is changed to Wal-Mart Central America

• Wal-Mart sold stores in Germany and South Korea and exits countries

• Sam's Club expands RFID pilot

• Coughlin pleads guilty to wire fraud and tax evasion in federal court

• Scott introduces three-year plan to turnaround the company

2007

• Wal-Mart acquires a 35 percent stake in Chinese discount chain Trust-Mart

• Wal-Mart increases Seiyu stake to 95 percent and plans to purchase remaining share

• Wal-Mart enters India with Bharti Enterprises

• Year two of strategic plan puts focus on merchandise, store experience and layout

• Scott delivers "Sustainability 360" speech that outlines environmental initiatives

• Fiscal year ends with $345 billion in sales

2008

• Wal-Mart opens its first cash-and-carry stores with Bharti Enterprises in India

• Year three of strategic plan includes chain-wide rollout of store and operational improvements

• Sam's Club said it would move to new, separate headquarters and announces business club warehouse pilot in Houston

• Scott announces retirement

Source: Staff Report

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