Following four consecutive quarters of declines in domestic same-store sales, Wal-Mart Stores Inc. Tuesday replaced the head of its U.S. operation, Eduardo Castro-Wright, with the unit’s chief operating officer, Bill Simon.
Simon will assume Castro-Wright’s role as president and chief executive officer of Wal-Mart U.S. Castro-Wright will remain vice chairman of the corporation and take on the previously vacant role of president and ceo of Global.com and Global Sourcing, working out of Global.com’s California offices. Global.com was formed in January and had reported to Castro-Wright.
A successor for Simon has yet to be named. Simon will report, and Castro-Wright will continue to report, to Wal-Mart president and ceo Mike Duke.
“As we continue to become a truly global company and address the business challenges of a rapidly changing world, it is clear that Global.com and Global Sourcing are critical to our future growth and success,” Duke said, explaining Castro-Wright’s move to California will allow him to be with his family following his wife Fabiola’s recent heart transplant.
Despite speculation the management shake-up had more to do with weakness in the Bentonville, Ark.-based firm’s U.S. business than Castro-Wright’s personal life, J.P. Morgan analyst Charles Grom said that after speaking with management he believed the change in roles was a decision “made by” Castro-Wright for family reasons.
While Tuesday’s move surprised many, it did not send shock waves through the investment community.
Saying her firm was “not surprised” by Castro-Wright’s new role and location, Citi broadlines analyst Deb Weinswig said, “We have been impressed with Bill Simon’s trajectory at Wal-Mart and the impact he has made on the U.S. business.…We also believe he is very in tune with the U.S. grocery landscape, and he will take Wal-Mart U.S. to the next level.”
Prior to joining Wal-Mart in his most recent post in 2006, Simon was senior vice president of global business development at Brinker International, where he guided the company to global expansion of its restaurant portfolio.
Daniel Binder, an analyst at Jefferies & Co., called the “risk-reward profile” of Simon’s promotion “favorable” and said there is an “opportunity for price appreciation of Wal-Mart shares in various macro environments, including on where another economic dip results in a second round of consumer trade-down.”
Last year, Wal-Mart, the world’s largest retailer, saw net income grow 8.8 percent to $14.41 billion as sales advanced 1 percent, to $405.05 billion, and same-store sales in the U.S., excluding fuel, fell 0.8 percent. First-quarter same-store sales dropped 1.5 percent.
At the end of trading Tuesday, shares of Wal-Mart fell 67 cents, or 1.4 percent, to $48.90.
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