Wal-Mart (NYSE:WMT) Welcomes a New U.S. CEO

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By Chris Hillman on July 25, 2014 Technology & Software

Wal-Mart (NYSE:WMT) is dealing with poor sales at the stores. They have decided to replace their U.S. CEO with the head of operation in Asia, as of Thursday. Wal-Mart (NYSE:WMT)’s stock decreased by 0.8% and ended the last trading session at $76.35. Bill Simon who has been the company’s U.S. CEO since 2010, was probably the best guy for the job of the company’s CEO. Unfortunately for him, Doug McMillon won. Gregory Foran will now fill the void left by Simon, and will soon be signing his contract for six months.

As Simon stepped down, he said on Thursday that he believed the it was the right time to move on and look ahead at other opportunities that are opening up to him. David Tovar, a spokesperson for Wal-Mart (NYSE:WMT) said that this was Simon and the company’s joint decision to replace him. He also pointed out that Simon had left his place on good terms with the company. Tovar noted that usually when someone else, besides the two possible candidates, gets the job at hand, he decides to leave soon for something else. However, Simon stepped down only a few weeks after his interview with CNBC in which he made serious comments about the consumers in general and the economy of the country.

Brian Sozzi, a retail analyst, said the ever since McMillon became CEO in February, it seemed plausible that Simon would have to step down soon. The last straw was Simon’s potential warnings related to earnings in the interview with CNBC. Simon mentioned the unemployment numbers and said that it would take quite some time until those numbers balanced. He pointed to the low and middle income consumers saying that they are challenged. Sozzi approached Wal-Mart (NYSE:WMT) to question these comments made by Simon. The company said that these comments were not warnings and must be treated as simply comments. Sozzi said that at Wal-Mart (NYSE:WMT), one only gives interviews when one has to say something positive.

Robert Drbul, an equity analyst, said that Simon must get the credit for turning the company around to re-emphasize product assortment and low prices. Simon had brought more career opportunities to the workers. He had also launched his plans for increasing U.S. manufacturing. Drbul wrote on Thursday that his firm holds the view that Simon contributed significantly to the success of Wal-Mart (NYSE:WMT) over his seven years.

Foran will take office as of August 9 and will be directly accountable to McMillon. The company said that for consultation, Simon will be available so that the transition is carried out seamlessly. McMillon was announced the CEO of the whole company in November. He took office in February.

Wal-Mart (NYSE:WMT) reported its earnings for the quarter in May, which showed the lowest quarterly growth in five years. According to McMillon, Foran will bring a new perspective to the company based on his experience and expertise. Thanks to Foran, Wal-Mart (NYSE:WMT) China progressed in pricing, product mix, and compliance and store operations. He helped improve the store portfolio. He will prove his worth to Wal-Mart (NYSE:WMT) soon.