CHICAGO (MarketWatch) — The revolving door at Wal-Mart Stores Inc. isn’t stopping any time soon, given the retailer’s recent relatively lame performance, and one analyst is betting that more high-level departures are nigh, even including that of Chief Executive Lee Scott.
In recent weeks, Wal-Mart
has announced a bevy of top executive exits, such as the December ouster of Julie Roehm, the risk-taking senior vice president of communications who had been on the job only 10 months.
Also out last month was Mark Goodman, executive vice president for Sam’s Club marketing and membership, who left to “pursue other interests.”
On Monday, Wal-Mart said that Larry Jackson, who was promoted in April to president and chief executive of global procurement — one of Wal-Mart’s most important positions — will be leaving next month to spend more time with his family. Also exiting is Jay Fitzsimmons, senior vice president and treasurer, who is retiring.
In a detailed research note that names names, Bear Stearns analyst Christine Augustine gives a tally card of sorts of who’s job is considered safest (there aren’t many), and who could be switched to another role or shown the door.
Wal-Mart’s holiday sales results were mixed in November and December. While same-store sales, the industry’s key growth measure, dropped in November for the first time in more than a decade, they rose 1.6% above Wal-Mart’s forecast.
Augustine offers this caveat, however: “There are numerous initiatives under way and given its size, Wal-Mart cannot be turned around in just a few quarters,” The analyst also noted that the company has a long history of “cross-pollination” in which executives are moved across divisions to diversify their experience.
Claire Watts, John Fleming and Pat Curran are considered the top contenders for job changes because their divisions — on which Wal-Mart had pinned high hopes for its three-year turnaround — were among the worst performers last year.
Watts, who is one of the most senior female executives at Wal-Mart and has been there since 1997, is executive vice president of product development in apparel and home merchandising for the stores. That means she was in charge of the “worst-performing areas of the company,” Augustine said, as her “new and high-profile strategy to introduce more fashion items has backfired.”
The analyst thinks that Fleming, the chief marketing officer, could be shifted out of marketing and back to merchandising, his strong suit — considering that the marketing initiatives “have not worked, despite a large build-out of a new team.”
Curran, another top female executive who has been at Wal-Mart going on 24 years, is the executive vice president of store operations who has been overseeing the massive remodeling of stores. Augustine thinks that her position is at risk because the “remodeling projects are taking longer and are more disruptive to sales than expected.”
As for the chief executive, who has been in that post since 2000, Augustine pointed to three main issues that could undermine Scott’s position: lackluster performance at Wal-Mart stores and of its stock; there are a great deal of initiatives that are “struggling” to gain traction; and the company has been under fire on many fronts.
But, she notes, he has the support of the Walton family, and they are the biggest shareholders.
Augustine thinks there could be another shake-up in the three biggest slots under Scott. John Menzer, vice chairman of the retailer is responsible for the U.S. stores — whose results have been anything but stellar in recent months — could get switched to another post. He and Mike Duke, also a vice chairman responsible for the international division, swapped jobs in 2005, and Augustine thinks another trade could be in the works that would also involve Eduardo Castro-Wright.
Castro-Wright, president and chief executive of the Wal-Mart stores division, could be promoted to the international division, she said, because of weak U.S. sales. “Turnarounds take time, especially for a business of this size,” the analyst added.
But if Castro-Wright were to leave, Augustine said that would be seen negatively because “he is generally well regarded by investors.” She also noted that he’s an “agent for change” with a “distinguished record” at Wal-Mart de Mexico.
Also on the safe list was Doug McMillon, president and chief executive of Sam’s Club who also has worked for the Wal-Mart stores division. In fact, Augustine thinks that he could be groomed as a future chief of the company.
Doug Degn’s job as executive vice president of food, consumables and so-called hard-line merchandising is not at risk either, according to Augustine, but he could decide to retire.
Wal-Mart shares ended the day up 38 cents to $47.98.
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