In a surprise move, Wal-Mart Stores Inc. (NYSE: WMT) replaced H. Lee Scott as chief executive with Mike Duke, the president of Wal-Mart International.The timing of the move is curious. Wal-Mart seems to be the only retailer showing signs of strength during the economic downturn as cash-strapped middle-class shoppers flock to the chain, lured by its low prices. I count myself among this group. Moreover, shares of the world's largest retailer are up 6.6% this year, making them the only component in the Dow Jones Industrial Average to post a gain.
Of course, Wal-Mart is spinning this like a dreidel at Hanukkah. Rob Walton, the chairman of the board of directors, said in a press release that "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 year [...] Lee has earned the respect and affection of our associates around the world, and of the Walton family."
Alright Mr. Walton, if this is true, why would you want to replace him? Perhaps Scott and the Waltons had some sort of dispute. Maybe it was over strategy. Maybe it was over something else. I found it odd that the announcement had no verbiage about Scott wanting "to spend more time with his family" or wishing him luck to "pursue other interests." Scott, though, maybe has decided it was time to call it a career.
Wal-Mart deserves credit for not rushing Scott, 59, out the door. Effective February 1, he will become chairman of the executive committee. The 58-year-old Duke won kudos from investors for guiding Wal-Mart's international business. Eduardo Castro-Wright, the head of Wal-Mart's U.S. operations, becomes vice chairman.
The new Wal-Mart will continue to be as big of a juggernaut as it has been in the past.
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Reader Comments (Page 1 of 1)
11-21-2008 @ 10:11AM
BHarrison said...
Hmmmm . . . as you say, it does seem to be a rather odd thing to occur at this moment. Perhaps Scott sees the handwriting on the wall and has decided to leave with his golden parchute and other compensations before something dire occurs . . . somewhal like liiquidating one's position in the market, anticipating a major decline . . . bowing out while the market is still good.
Granted, we need to REPLACE most of the CEOs, at least those in the failed corporations that have been involved in the market pyramid or Ponzi schemes. However, is there a legitimate basis for Scott to be removed??? His departure certainly raises a lot of questions.
11-21-2008 @ 11:07AM
Al Marcy said...
Nobody at board level cares what is happening anywhere else. Get over it.
11-21-2008 @ 11:32AM
torre said...
Scott is retiring in Feb so why the surprise that he's being replaced, and the timing of the announcement????
Are you surprised by the choice of Dukes, or surprised that a retiring CEO is being replaced (that would be no surprise; nor that 'timing' of an announcement in late Nov that an ensuing opening for Feb has been filled)?
11-21-2008 @ 12:33PM
Dave said...
This is how I see it. The reason Scott is stepping down is because we have a new man in the White House and unions have their best chance yet with Wal-mart. Scott is so afraid of unions in his stores, he can't stand it!
11-21-2008 @ 2:06PM
Roudy said...
I think we as shareholders should be scared of the union coming to Wal-Mart. Just look at what the auto union is doing to the auto makers. #4 comment must be a union member from his remarks. Any union finally manages to ruin any company ,in my opinion.Remember the auto union member worker has to work only 20 years to draw full benefits including medical.Who of us in other areas have it so good?? I repeat that the auto union has helped ,in a big way ,to almost bankrupt the industry and they expect us tax payers to bail them out?? There is something very wrong with this picture.RoudMan
11-23-2008 @ 2:02AM
Jessy Scholl said...
Roudy, adding UAW to this discussion is stupid. They did nothing to force the automakers to the brink of death. GM management has already admitted that it is at fault. As for Lee Scott's retirement, I think it is simply a story where he negotiated an out because he felt that it was time for somebody else to take over. If something is wrong, it is likely an health scare for Lee and let's hope it isn't that.
11-24-2008 @ 1:57PM
RoudMan said...
I will respond to Jessy by saying that I included the auto union in my response only because a union is trying so hard to to get in Wal-Mart and if they do they will cause the very slow demise of WMT to. Also maybe some don't know but part of the current bail out wanted by GM is to help fund the retirees pensions and health care fund. I completely disagree with this part of the package. I am aware that GM employees/retirees are now paying a portion of their benefits but the rest of us have always paid a portion of ours I guess because we were not union?
In closing I would like for Jessy and others of his persuation to think of this "old" man and apply this old saying to me.
"Allow fools to be fools as long as they are happy". This about sums me up I think.
RoudMan