NEW YORK, N.Y. – Wal-Mart is replacing the chief of its U.S. discount stores in what could be an indication that it’s losing confidence that its largest business unit will rebound after more than a year of disappointing results.
Greg Foran, who was promoted to president and CEO of Wal-Mart Asia earlier this year, will succeed Bill Simon, who had been CEO of Wal-Mart’s U.S. stores for four years, effective on Aug. 9.
The move, which was announced Thursday, marks the company’s first big management shake-up under Doug McMillon, who took over as CEO of Wal-Mart Stores Inc. in February. Foran, 53, will report directly to McMillon.
Simon’s departure isn’t surprising. He had been considered a top candidate for the critical job at the Bentonville, Arkansas-based retailer and was previously passed over for McMillon. But some analysts question the timing of Simon’s resignation. Wal-Mart, which reports second-quarter earnings results next month, is heading into the two biggest shopping periods of the year: the back-to-school and winter holiday seasons.
“A decision to replace a high-ranking leader of a major retailer before back-to-school and before holidays speaks volumes,” said Brian Sozzi, CEO of Belus Capital Advisors. “McMillon is starting to clean house and pick executives who will move quicker.”
Wal-Mart declined to make either Simon or Foran available for interviews on Thursday. But Wal-Mart spokesman Dave Tovar told The Associated Press that Simon’s resignation was mutual. He said that Simon and McMillon have been having ongoing discussions about Simon’s departure. On July 18, Simon officially agreed to retire.
In response to the timing of the resignation, Tovar said merchandise for the back-to-school and the holiday seasons have already been ordered. “This will give an opportunity for Greg to look at the plan and see if there are any other suggestions for making it better,” said Tovar, who added that Foran will be taking over the U.S. discount business at a time when the company evaluates its future budget and strategy planning, a three-month period that ends in September.
The leadership change at Wal-Mart’s U.S. stores comes after the division has suffered five straight quarters of sales declines at stores that have been open at least a year. The unit, which accounts for 60 per cent of the retailer’s overall sales, has been hurt by a tough economy that has squeezed its low-income customers, along with fierce competition from dollar stores and Amazon.com.
The move to name Foran indicates that Wal-Mart is looking at new ways to boost sales at its U.S. discount division.
Foran, a 35-year retail industry veteran, joined Wal-Mart in 2011 and became president and CEO of Wal-Mart China in 2012 until he was promoted to president and CEO of Wal-Mart Asia this year. Before joining Wal-Mart, Foran held a number of roles with Woolworths, the leading retailer in Australia and New Zealand.
“Greg is one of the most talented retailers I’ve ever met,” McMillon said in a statement.
Foran follows Simon, who joined Wal-Mart in 2006 as senior vice-president of professional Services. He was promoted to chief operating officer for Wal-Mart’s U.S. division from 2007 to 2010. During that time, he created and launched Wal-Mart’s successful $4 prescription drug program.
When Simon took on the role of CEO of Wal-Mart’s U.S. division in 2010, he led a turnaround of the unit by correcting mistakes it made in pricing and merchandise.
He focused on the company’s roots of offering everyday low prices. He also helped restore thousands of popular items that the company had stopped selling in an overzealous attempt to de-clutter the stores. That helped Wal-Mart get out of a two-year sales slump in late 2011.
Simon also has been leading the company’s campaign to revitalize U.S. manufacturing and helped to spearhead the company’s move to accelerate its plans for small-store formats.
Wal-Mart said that Simon will be available for the company on a consulting basis for the next six months. According to the terms of his retirement pact, he can’t work for a business that competes with Wal-Mart for two years. Foran’s successor will be announced at a later date.