Wal-Mart Announces New CEO

Wal-Mart(WMT), this week, announced that their CEO H. Lee Scott would be stepping down to retire on February 1, 2009 and he would be succeeded by Mike Duke, the current vice chairman of Wal-Mart International. Duke was also elected to the board of directors of Wal-Mart effective immediately. Eduardo Castro-Wright, current CEO of Wal-Mart USA will gain the responsibility for global procurement and be promoted to vice-chairman.

Lee Scott joined Wal-Mart in 1979. He was named the 3rd CEO of the retail giant in 2000. During his tenure as CEO Wal-Mart has seen its stock price drop 22%, but shares are up 6.6% in 2008, and Wal-Mart is one of the few companies expected to do well during the Christmas season as consumers seek out low prices. Wal-Mart is the only component of the Dow Industrials whose stock is up for the year. Leaving now allows Scott to leave his Wal-Mart post on a high note.

Scott's tenure as CEO has often been marred with controversy as Wal-Mart was criticized for its business with China and its treatment of employees. The last two years, though, have seen Wal-Mart begin to rebound as existing stores underwent renovations, smaller, warmer new stores were opened, and inventory was better tailored to appeal to customers. Jim Cramer of TheStreet.com stated that Scott had "turned around Wal-Mart and made it a place you really want to be." Scott will maintain an advisory role with Wal-Mart and stay on as chairman of the executive committee of the board of directors through 2011.

Mike Duke joined Wal-Mart in 1995, and has captained the company's overseas operation since September 2005. During his time at Wal-Mart International Duke has overseen Wal-Mart's expansion in many markets including Brazil and India and exit from the money-losing markets of Germany and South Korea. Before coming to Wal-Mart, Duke spent 23 years in retail with the May Stores and Federated Department Stores which are now known as Macy's Inc.

Duke's international experience is viewed as fundamental as Wal-Mart seeks to expand its global position. One-quarter of Wal-Mart's revenues are currently from international sales and, with profits rising 11% during the quarter, the international division is Wal-Mart's fastest growing sector. Wal-Mart reports that during the next five years it plans to increase its capital allocation to emerging markets to 53% from an allocation of 33% during the past 5 years.

Duke released a statement that 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 news of Wal-Mart's CEO transition was met with surprise coming just a week before Black Friday, but the choice of Duke to succeed Scott has been largely greeted with approval. Wal-Mart's stock rose $2.26 or nearly 4.5% on Friday.