By  on July 24, 2014

In a surprise shift, Wal-Mart Stores Inc. has tapped its top Far East executive to revive its stores at home in the U.S.

On Thursday, Greg Foran was promoted to president and chief executive officer of Wal-Mart U.S., giving him the formidable task of restoring momentum to the U.S. discount chain amid economic headwinds, a midmarket consumer base that’s pinched for cash and a mature fleet of stores.

“I am excited to get started,” Foran said Thursday. “Being asked to lead the Wal-Mart U.S. business is a privilege that I don’t take lightly. The needs of our customers are changing dramatically and we have an enormous opportunity to serve them in new and different ways. We must be fierce advocates for our customers, work meticulously to exceed their expectations and earn their trust every day.”

Foran, who succeeds Bill Simon, will be further challenged by the fact that his recent Wal-Mart experience has been abroad, not domestic. Foran has been president and ceo of Wal-Mart Asia since early this year, after serving as president and ceo of Wal-Mart China since March 2012. He joined Wal-Mart International as a senior vice president in October 2011.

Apparently aware of the learning curve Foran will have in the U.S., Wal-Mart noted that Simon would be “transitioning out of the company” and could be available to consult with his successor for six months.

Foran starts his new job Aug. 9. He will report to Doug McMillon, president and ceo of all of Wal-Mart, who hinted at changes ahead: “Greg’s depth of knowledge and global experience will bring a fresh perspective to our business. His passion for fresh food, experience in general merchandise and commitment to e-commerce will help us serve our customers even more effectively for years to come.”

Foran is credited with leading the team in China to make improvements in assortment, pricing, store operations and compliance. Prior to Wal-Mart, Foran held different roles at Woolworths in Australia and New Zealand, including managing director of supermarkets, liquor and petrol with responsibility for more than $40 billion in sales. Earlier in his career, Foran served as general manager of Big W, Woolworths’ discount store business, and as general manager of Dick Smith Electronics. Wal-Mart said it will reveal Foran’s successor at a later date.

His sudden shift to the U.S. raises questions about Simon’s departure. Some analysts believe it was Simon’s decision to leave because he was passed over for the top job at the global retailer when McMillon became president and ceo earlier this year. Others said it was more due to the business not meeting expectations.

“Bill Simon is no merchant,” said retail analyst Walter Loeb. “The results have been disappointing and the fact that he accelerated discounts hurt the company, but the business environment is very difficult right now. There’s an even more serious problem. Wal-Mart is reaching a point of maturity and investors are demanding growth. The reality is some of the stores are not growing anymore. Wal-Mart has been getting more into the food business to generate sales and traffic, which is also a difficult decision because the margins in food are thin but food creates more traffic” that would spur business in other areas of the store.

Noting recent high-level changes at Wal-Mart, Loeb said, “Doug McMillon has been sweeping through the company to revitalize it.” In the last couple of months, two new ceo’s were named, Dirk Van den Berghe for Wal-Mart Canada and Shelley Broader for Wal-Mart’s Europe, Middle East and sub-Saharan Africa region.

“The new head of Wal-Mart U.S., Greg Foran, is a somewhat unknown quantity to Wal-Mart investors,” David Strasser of Janney Capital Markets, said in a research note. “He came to Wal-Mart in 2011 to run the China division, from Woolworths in Australia, where he managed the 150-store Big W discount chain. The initial knock will be that he has no U.S. experience, and that he has no experience running a company this size. These are legit criticisms, considering the job he is about to begin.

“On the flip side, we think Wal-Mart believes that they have identified a strong leader with retail expertise to take control of this U.S. business. We anticipate there will be little change to the small store strategy, as that has been embraced by both the board and the company leadership. There will be speculation that Mr. Simon was forced out, which once again, we do not believe is the case. There have been some struggles at the U.S. division, but we believe that has been as much a macro issue as anything else.”

“While there was conjecture that Bill may have been upset at not getting the top ceo job earlier this year, being picked over for Doug McMillon, he seemed very content still running his segment in recent meetings,” said Paul Trussell from Deutsche Bank, in a report. “Plus, the appointment of a non-U.S. executive to take over the company’s largest segment, bypassing all of Bill’s lieutenants, adds to the question of whether performance or strategy differences played a role.”

Deutsche Bank also pointed out that Foran will have “a substantial learning curve” and this appointment “showcases a clear change in direction of the division....This likely presents an opportunity for Wal-Mart to think differently about how it positions itself for the future of retailing. These changes may include a substantial reduction in Supercenter store openings and a focus on e-commerce and small stores.” Near-term, Deutsche Bank has concern that second-quarter results may be lackluster.

“He will bring a fresh look to the U.S. business,” said Wal-Mart spokeswoman Brooke Buchanan. “He has broad retail experience covering 35 years.”

Simon has a two-year non-compete clause in his contract, limiting his ability to join any other major retailer, such as Target Corp., J.C. Penney Co. Inc., The Bon-Ton Stores Inc. and Kohl’s Corp., which are all seeking new ceo’s to turn around their businesses. Simon has been ceo of the U.S. stores since June 2010 and became a champion of the company’s initiative to buy more American-made product.

Wal-Mart credited Simon with lowering the cost of health care through Wal-Mart’s $4 prescription offering, introducing small store formats, initiating efforts to integrate digital and brick-and-mortar operations, strengthening the focus on everyday low prices, increasing the product assortment, getting the company to hire more U.S. veterans and spearheading efforts to source from and help revitalize U.S. manufacturing across multiple classifications. Wal-Mart this month held its first open call for U.S. vendors at the company’s Bentonville, Ark., headquarters. The retail giant is armed with $250 billion to spend over 10 years on products made in the U.S. “Changes in the cost of energy and transportation and all the variables that make up manufacturing are swinging in the direction of the U.S. It’s more efficient and effective to manufacture here now,” Simon said at the time.

On Thursday, he commented about his departure: “This felt like the right time to move on and focus on my next opportunity. I look forward to helping the company as much as I can over the next six months.”

Wal-Mart said Simon was not fired. “It was a mutual decision between Bill and the company made on July 18,” said Buchanan.

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