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3 perspectives on Walmart's surprise CEO switch
The retail giant appointed Greg Foran to run its U.S. operations, after the abrupt departure of Bill Simon
 
Wal-Mart flipped its leadership fast.
Wal-Mart flipped its leadership fast. (Illustration by Sarah Eberspacher | Photo courtesy Scott Olson/Getty Images)

Walmart is shaking up its C-suite, said Megan McArdle at BloombergView. The retail giant appointed a new CEO to run its U.S. operations last week, after the abrupt departure of Bill Simon, who had held the post since 2010. "It's an unusual time for a retailer to do a management shake-up, what with back-to-school right around the corner and Christmas just a few doors further down." That makes you wonder what has prompted such an ill-timed change. To be sure, "Walmart faces a tough retail environment," and same-store sales have declined in each of the past five quarters. The chain managed to weather the early recession, thanks to a spike in affluent customers looking for good deals in tough times. But those shoppers' wallets have largely recovered, and its core demographic "runs poor and strapped, so extended unemployment and a generally slack labor market haven't done it any favors." Making matters worse, the big-box store is facing "stiff competition from dollar stores," putting more pressure on the company's profits. "Unless the incoming CEO has a way to boost low-wage incomes nationwide or legislate dollar stores out of existence, it's hard to see what sort of magic he's going to work to restore them."

So who is the new CEO, anyway? asked Alison Griswold at Slate. That would be Greg Foran, who briefly served as president and CEO of Walmart's Asia division and previously headed up Walmart China, "where he was credited with improving store operations and making strategic investments in the supply chain." Walmart undoubtedly hopes Foran can work his brand of magic back home, too. With just weeks to go before the company reports its second-quarter earnings, the retailer is quickly running out of excuses for its declining sales. "For the first quarter, Walmart followed the lead of every other business and blamed its poor results on 'unseasonably cold and disruptive weather.'" Before that, it was cash-strapped customers, squeezed by higher taxes and vanishing government benefits. And the quarter before that, it was the global economy and volatile currency exchange rates. If the outgoing Simon "is supposed to be the last in this string of excuses, Foran will presumably be under a lot of pressure to turn Walmart's U.S. operation around."

He "faces a daunting challenge," said Claire Zillman at Fortune, not least because of growing competition from online retailers like Amazon and "evolving shopping patterns among Americans — who are now making more frequent trips" to local drugstores. Part of Walmart's strategy to combat these trends includes opening smaller stores like Walmart Express and "further embracing e-commerce." But that might not be enough. Part of the company's poor performance could be chalked up to "self-sabotage," including "its decision to cut worker hours and its well-publicized refusal to significantly raise workers' wages," two major reasons its stores "are increasingly sloppy and sparsely stocked." Such missteps would never have happened on Sam Walton's watch, said Walter Loeb at Forbes. Tightening inventory and slashing costs was likely an effort to please Wall Street analysts, but it "may have cost the company more than just lost sales; it may have affected customer loyalty." We'll see whether Foran can earn it back.

 
Sergio Hernandez is business editor of The Week's print edition. He has previously worked for The DailyProPublica, the Village Voice, and Gawker.

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