Wal-Mart Names McMillon

Sam's Club head to oversee international division.

Wal-Mart Stores Inc. on Wednesday promoted Doug McMillon to oversee the company’s second largest operating segment, Wal-Mart International, as president and chief executive officer.

McMillon, currently president and ceo of Sam’s Club, will replace and report to Mike Duke, who has been named to succeed H. Lee Scott as the company’s president and ceo. Duke and McMillon will assume their new roles Feb. 1.

McMillon, a consummate Wal-Mart insider, is expected to continue the international division’s strategy of focusing on emerging markets with growth potential, as well as established markets that can deliver strong returns.

In February, McMillon will go from overseeing a $40 billion warehouse chain to running a complex $100 billion division with businesses in countries such as Mexico, Brazil, China, Japan and the U.K. “I hope he’s a fast learner,” said Walter Loeb, president of Loeb Associates. “He was a fast learner at Sam’s Club. He has a great chance of making his mark in a division that’s probably going to overshadow the growth of the domestic division. Doug did a super job in revitalizing Sam’s Club. It shows his ability to manage people and ignite momentum in a division.”

“It appears they’re grooming [McMillon] for additional responsibility within the organization,” said Bill Dreher, a retail analyst at Deutsche Bank. “He’s a rising star in the organization. He’s done a fine job at Sam’s, but Sam’s is not the growth vehicle going forward. International is the growth vehicle.”

“[McMillon’s] had experience with the core Wal-Mart brand and with Sam’s Club. This will round him out and groom him to become a ceo candidate someday,” said Joseph Feldman, retail analyst with Telsey Advisory Group. Feldman wasn’t concerned about McMillon’s lack of experience on the international front. “One big thing Wal-Mart has learned is that you really need local management on the ground running the businesses. He’ll continue to go after emerging markets. We’re not going to see Wal-Mart going after other established European nations on the continent.”

Duke cleaned house at international when, in 2006, Wal-Mart exited Germany and sold its ailing retail business to Metro AG, the same year it shed its South Korean operation. While Wal-Mart has been keen on entering Russia — the retailer in May said it had appointed an executive to explore opportunities there — political instability in the region may hamper any immediate efforts.

“[Duke] established a platform and a mandate that Doug can follow,” said one retail consultant, who requested anonymity. “McMillon will be a good soldier.”

McMillon’s career trajectory is similar to that of Scott’s. McMillon started as an hourly associate, unloading trucks at a distribution center while working his way through college. Scott rose through the ranks of the logistics operations, joining Wal-Mart as an assistant director of transportation.

“In his 18 years with the company, Doug has learned the business from the bottom up, with leadership roles in all three operating divisions,” said Duke, adding McMillon will continue to grow the international portfolio, export the Wal-Mart culture and leverage global strengths in markets where the retailer operates. “He demonstrates the company’s culture and values every day.”

“Today, it would look like he [McMillon] may be the guy” to eventually hold the Wal-Mart Stores Inc. ceo position, Feldman said. “It’s likely that Eduardo Castro Wright [vice chairman] will get the job before McMillon would. Presumably it will be Duke in place for five or 10 years, Eduardo and then McMillon.”