By  on January 25, 2007

Looking to grow beyond its core customer, Wal-Mart has appointed a chief merchant for the first time.

The world's largest retailer, in a shake-up of U.S. operations, said Tuesday that chief marketing officer John Fleming had been named chief merchandising officer. He will be responsible for almost everything the $210 billion U.S. division sells under a new structure that creates five merchandise divisions and, four of them (apparel, home, entertainment and grocery) under his supervision.

The fifth division, pharmacy/optical, will be run by Bill Simon, executive vice president of professional services and new business development, who developed the Bentonville, Ark., retailer's successful $4 generic prescription drug program.

Stephen Quinn, a former Frito Lay executive who helped steer Wal-Mart back to its core low-pricing message in recent months, will succeed Fleming as chief marketing officer.

"This is a continuation of the rapidly changing picture at Wal-Mart U.S.," said Richard Hastings, analyst with Bernard Sands. "The relationship between Wal-Mart and its core customer is not yielding satisfactory results — basically, those customers don't have a lot more money to spend at Wal-Mart — so they have to try different things and different people."

Wal-Mart is struggling to turn around its U.S. operations after two years of disappointing same-store sales results, including November's 0.1 percent drop, the first decline in a decade. The retailer has announced that it will slow the pace of U.S. expansion to upgrade the profitability of existing stores by selling more high-margin goods.

Wal-Mart, which has a culture focused on logistics and technology, has never had a chief merchant. The company's merchandising operations had been split; executive vice president Claire Watts ran soft goods and Doug Degn headed grocery and hard goods. Degn is retiring, and Watts will retain responsibility only for apparel. She will report to Fleming.

Executives in charge of grocery, home and entertainment, also reporting to Fleming, will be named later, said Wal-Mart spokeswoman Linda Blakely.

"We believe that there will be additional changes on the merchandising side in the near future to enhance the talent in the organization,'' said Deborah Weinswig, retail analyst at Citigroup. The "announcements were not a surprise, based on the recent weakness in sales. The addition of John Fleming as the chief merchandising officer will give the company a more unified approach to merchandising and allow the organization to tap into his significant experience at Target."

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