Walmart Gets A New CEO As Old One 'Transitions' Out
Change happens after a series of quarters with disappointing results.
Walmart announced today that William "Bill" Simon, the head of the US division, would step down immediately and be replaced, according to a company press release. Taking over on August 9 will be Greg Foran, who was previously president and CEO of Walmart Asia. Simon will "be available on a consulting basis for the next six months to ensure a seamless transition."
The timing and wording of the release suggest that this could have been a negotiated resignation. According to Walmart, Simon, who became CEO of Walmart US in 2010, "led a turnaround that reinvigorated the company's focus on everyday low costs, everyday low prices and an increased product assortment." The company says that Simon was also responsible for some popular moves, like the commitment to hire more veterans.
The timing and wording of the release suggest that this could have been a negotiated resignation. According to Walmart, Simon, who became CEO of Walmart US in 2010, "led a turnaround that reinvigorated the company's focus on everyday low costs, everyday low prices and an increased product assortment." The company says that Simon was also responsible for some popular moves, like the commitment to hire more veterans.
What wasn't addressed was financial performance, and that was a far different matter. The US division has had sluggish same-store sales for the past year, according to Reuters.
Same-store, also known as comparable, sales are a common business measurement in retail. Expansion or reduction in the number of units a chain has can make business look better or worse than it might actually be. Executives and analysts look at the comparative performance of stores that have been in operation for an extended period of time, usually at least a year. Same-store sales give a better sense of the ongoing financial health.
In addition, the company has seen generally disappointing results, much of which has been the fault of Walmart US operations, as CNN has reported.
"Their U.S. sales have been in a structural decline," Brian Sozzi, CEO of Belus Capital Advisors wrote, according to the CNN report. "Every quarter Wal-Mart has another excuse."Wal-Mart also triggered alarm bells by forecasting poor earnings for the current quarter, which is free from weather-related headaches. The world's largest retailer has now issued five consecutive below-consensus outlooks -- akin to going from being an "A" student to a "B" one.
It could be that Doug McMillon, president and CEO of the entire Wal-Mart organization, decided to replace Simon.
Simon's retail experience was largely at Wal-mart. He was hired in 2006 as an executive vice president and served in two different capacities before becoming chief operating officer of Walmart US in 2007. Before Wal-mart, Simon was in charge of Florida's operations and administrative functions under Governor Jeb Bush. Prior to his government work, he was at beverage giant Diageo. In contrast, Foran has 30 years of retail experience, including long stints at chains in Australia.
Something unusual about Wal-Mart's leadership choices has been its run of "unpedigreed" CEOs, as Daily Finance has noted. Foran continues the trend. Although he "attended two advanced management programs at both Harvard University and the University of Virginia," according to Wal-Mart, his degree was from the New Zealand Institute of Management in Auckland, New Zealand.
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