Change is in the air these days, and Wal-Mart (NYSE: WMT) is apparently no different, given a surprising announcement today. CEO H. Lee Scott, who has headed up the company for almost nine years, plans to retire. I guess it's a better time to say "so long" than when the behemoth retailer was in the doldrums -- lately, Wal-Mart has been firing on all cylinders, so Scott can leave while it's all on a roll.
Scott will leave on Feb. 1, 2009, when the company's fiscal year ends. He will be replaced by Mike Duke, who is currently CEO of Wal-Mart's international segment. Interestingly enough, both guys are about the same age. (Scott is 59, Duke is 58.)
Duke's coming in at an interesting time. Although Wal-Mart, like fellow discounter Costco (Nasdaq: COST), has proven a bright spot in these tough economic times, it recently indicated that it may not be bulletproof -- or recession-proof -- as consumers struggle with their budgets.
Meanwhile, although it's been much easier to lure customers focused on cost-cutting these days, one can only hope Wal-Mart won't lose sight of the importance of protecting its brand while not seeming to do its business in a thuggish manner, which has often been a problem in the past.
Wal-Mart recently said that it's joining up with Duke Energy (NYSE: DUK) to use wind power to power some stores, so hopefully it will continue to look at new ideas. Plus, with the new Democratic administration coming in, an increase in the power and influence of unions could really present a challenge for Wal-Mart in the coming years.
Wal-Mart's not alone in switching CEOs: Last spring, rival Target (NYSE: TGT) handed the reins from Bob Ulrich to Gregg Steinhafel, another company long-termer. Interestingly enough, though, Target's been a bit of a disappointment in the otherwise thriving discount-retail niche.
Changes in management at publicly traded companies are more significant in some cases than in others. (Look at the crazy gyrations in Apple's (Nasdaq: AAPL) stock price whenever any wacky rumor circulates about Steve Jobs' health and well-being.)
Clearly, though, change is coming to Wal-Mart. In the past, the company has often been one of my less favorite retail names, primarily because of how it treats workers and suppliers (despite my admission that tough times made its stock more attractive, and did they ever). If Wal-Mart can continue to make good changes, any market share it steals during the recession might stick. I'd say Mr. Duke definitely has some challenges ahead.
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