BOSTON — With the ship thundering ahead, Wal-Mart president and CEO H. Lee Scott will step down after nine years, handing the wheel to a veteran groomed to take over the post.
Michael Duke, 58, an engineer who spent 23 years at traditional department stores will become the $375 billion company’s fourth CEO, effective in February.
A longtime confidant of Scott’s, Duke will be the retailer’s first chief executive to never meet founder Sam Walton and to have significant international experience.
Duke most recently led the company’s $100 billion international division, whose 3,000 stores in 14 countries are expected to propel the company’s growth for the next decade. His successor at Wal-Mart International will be named by January.
“This management change occurs at a time of strength and momentum for Wal-Mart,” said Rob Walton, chairman of Wal-Mart’s board of directors. “We are confident that the strategy we have in place is the right one for future success, and Mike has been actively involved in developing and executing this strategy.”
Scott, 59, will stay on Wal-Mart’s board and will advise the company through 2011. The CEO is stepping down on a high note, regarded as a leader who made Wal-Mart a global company while gracefully handling an unprecedented level of scrutiny.
Duke, by contrast, earned the job through decisive leadership of Wal-Mart International. He stepped up expansion in China, shuttered unprofitable German and South Korean operations, oversaw a series of small acquisitions in South America and helped ink a deal to open cash-and-carry stores in India.
“As soon as Mike got to International, they got out of Germany and they got out of South Korea,” said John Lawrence, managing director of equity research for Morgan Keegan & Co. “Those decisions were made on his watch and they were the right ones. He will be the first CEO that’s really been in the trenches internationally.”
The announcement’s timing — a week before Black Friday — surprised retail observers, but Wall Street applauded the news, trading the stock up more than 4 percent.
“A lot of people in the investment community were hoping [Duke] would become the next CEO,” said Joseph Feldman, retail analyst with Telsey Advisory Group. “But given that he’s about the same age as Lee Scott, lots of people thought it was more likely that [head of Wal-Mart U.S.] Eduardo Castro-Wright would become the next CEO. I’m actually quite pleased. It’s a good thing for Wal-Mart and a good thing for Mike Duke.”
Scott is “handing off Wal-Mart when the management team and company are operating extremely strongly,” said Citigroup retail analyst Deborah Weinswig in a research note.
After a five-year malaise, Duke inherits a company charging forward. Wal-Mart has an enviable balance sheet and market proposition — low prices — that’s ideal for a prolonged economic downturn. In recent quarters, the company has outpaced Target Stores and other rivals.
“There are very few winners in retail right now, and Wal-Mart is certainly one of them,” said Moody’s Investor Service analyst Charles O’Shea. “They have the trifecta — Sam’s Club, Supercenters and discount stores — operating well in the U.S. right now.”