Discount retailer Wal-Mart Inc. (WMT) said Friday that its board of directors has promoted Mike Duke, the head of its International Division, to the post of president and chief executive officer of the company, effective February 1, 2009. He succeeds Lee Scott, who will retire after having served at the company's helm for more than eight years. The surprise announcement comes as Wal-Mart braces for the crucial holiday season and intends to capitalize on its strength as a discount retailer.
Duke, 58, was also elected to the company's board of directors, effective immediately. Meanwhile, Scott will continue as chairman of the executive committee of the board. The Bentonville, Arkansas-based company also said it plans to make an announcement on Duke's successor as president of Wal-Mart International by the end of the fiscal year.
The world's largest retailer said its board also approved the promotion of Eduardo Castro-Wright, CEO of Wal-Mart U.S., to vice chairman of Wal-Mart Stores, effective immediately. In addition to his current responsibilities as president and chief executive officer of Walmart U.S., the 53-year-old Castro-Wright will assume management responsibility for the company's Global Procurement operation.
Mike Duke joined Wal-Mart in 1995 and currently serves as vice chairman, International Division. He has served in various positions including as president and CEO of Wal-Mart Stores Division USA. He had full operational responsibilities for the company's international operations. Prior to joining Wal-Mart, Duke has 23 years experience in retailing with Federated Department Stores and May Department Stores.
Commenting on Duke's appointment, Rob Walton, chairman of the Wal-Mart board of directors said, "Mike Duke is a highly-respected executive both domestically and internationally, with broad experience throughout the company, having successfully led Wal-Mart's Logistics Division, U.S. operations, and International operations. He understands retail and appreciates the complex global environment in which we operate."
Walton noted that the management change occurs a time of strength and momentum for Wal-Mart.
Duke said, "I am looking forward to leading this great company. Wal-Mart is very well positioned in today's economy, growing market share and returns, and is more relevant to its customers than ever."
The outgoing CEO, Lee Scott, joined Wal-Mart in 1979 as an assistant director in the logistics division and rose through the ranks to become executive vice president of merchandise in 1995. He became president and chief executive officer of the Wal-Mart Stores U. S. division in 1998, chief operating officer and vice chairman for the company in 1999, and president and CEO in 2000.
Scott is credited with launching the company's diversity office in 2003. In October 2005, he initiated an aggressive corporate environmental sustainability initiative, leveraging Wal-Mart's global reach in three key areas of renewable energy, zero waste and sustainable products.
Under Scott's direction, the company has also taken the lead in addressing the U.S. health care crisis by introducing $4 generic prescription drugs and in-store health clinics. The company has also partnered with other employers and opinion leaders to call for major health care reform.
Walton said, "Lee Scott has made an extraordinary contribution to Wal-Mart during his almost thirty years of service as an associate, and as our president and CEO for the last nine years. Lee has led Wal-Mart with humility and grace, and has been a worthy successor to his predecessors, Sam Walton and David Glass."
The new vice chairman of Wal-Mart Stores, Eduardo Castro-Wright, joined the company in 2001 and worked in Mexico through 2005, including as CEO of Wal-Mart de Mexico. He then joined the Wal-Mart US team as chief operating officer of Wal-Mart Stores division in early 2005 and was later promoted to president and CEO of Wal-Mart Stores Division in the same year. Prior to joining Wal-Mart, Castro-Wright worked for Honeywell International Inc. (HON) and Nabisco Inc.
Earlier in November, Wal-Mart reported a 10% increase in profit for the third quarter from a year ago, but forecast earnings for the fourth quarter below analysts' estimate and cut its earnings outlook for the full year as it faced a weakening global economy and a strong dollar. However, Wal-Mart officials sounded an upbeat tone for the upcoming holiday season, saying that shoppers are responding to the company's early Christmas promotions.
Many retailers have reported lower earnings for the third quarter and issued profit warnings for the all-important fourth quarter, which includes the holiday shopping season. The ongoing economic crisis, which has been dubbed as the worst since the Great Depression, has wreak havoc on retailers, as it has forced consumers to sharply cut back on their spending. A shaky job market and a prolonged housing slump have added to the gloom.
However, low-price retailers like Wal-Mart have fared better than the rest of the sector during the uncertain economic climate, as consumers search for deals in an attempt to save money.
Wal-Mart has more than 2 million associates and 7,300 retail operations in fourteen markets across the globe.
In Friday's regular trading session, WMT is trading at $51.44, up $0.78 or 1.54% on a volume of 6.56 million shares. The stock has been trading in a range of $43.11-$63.85 in the past 52 weeks.
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