May 7 (Bloomberg) -- Wal-Mart Stores Inc.’s board, as it prepares for new leadership at the company, has identified two internal candidates to succeed Chief Executive Officer Mike Duke, according to a person familiar with the situation.
The two leading contenders are international chief Doug McMillon, 46, and Bill Simon, 53, who runs the U.S. operations, said the person, who asked not to be identified because the matter is private. While Duke, 63, isn’t expected to step down immediately, Wal-Mart may name his successor in the coming months, the person said.
The new CEO will take over a chain struggling to keep U.S. sales growing as its lower-income customers pull back amid high unemployment and defect to online retailers such as Amazon.com Inc. or dollar stores such as Dollar General Corp. The next CEO also will have to handle a diminished workforce that’s having trouble keeping store shelves stocked and oversee a probe of allegations of bribery in Mexico.
“There are rumors and speculation about our company all the time and we just don’t comment on them,” David Tovar, a Wal-Mart spokesman, said in a telephone interview today. Tovar declined to comment on succession timing.
Duke is the fourth CEO since Wal-Mart became a publicly traded company in 1970. Founder Sam Walton was the first, and, ever since he stepped down in 1988, the company has looked inside for its CEO. Duke and his predecessors -- Lee Scott and David Glass -- all were insiders with years of experience at the company before taking over the top job. Duke was named CEO of the world’s largest retailer in November 2008 and didn’t formally take the reins until Feb. 1, 2009.
Under Duke, the company’s shares have lagged behind the Standard & Poor’s 500 Index. Wal-Mart advanced 67 percent from the last trading day before Duke took over through yesterday, compared with a 96 percent increase for the S&P 500. A gauge of 42 consumer-staples companies in the S&P 500 rose 85 percent in the same period, according to data compiled by Bloomberg. Wal-Mart was unchanged at $78.83 at the close in New York.
McMillon, who has worked at Wal-Mart since starting as a summer worker in 1984, is close to the Walton family, three other people said. Simon joined Wal-Mart in 2006, after working in the food and beverage industry.
“It’s the kind of organization that requires promotion from within, and therefore the candidates are obviously inside,” said Peter Crist, chairman of Crist/Kolder Associates, an executive recruiter based in Hinsdale, Illinois.
Like all companies with good governance, succession planning is a regular and ongoing process at Wal-Mart, said another person.
Before becoming CEO, Duke improved Wal-Mart’s distribution system by consolidating shipments to make sure each delivery truck would contain a full load of goods for each store. He was later put in charge of Wal-Mart’s U.S. stores in 2003.
As CEO, he installed a new U.S. leadership team, which reversed course on a strategy to de-clutter stores, and is opening smaller locations in rural and urban areas to lure back U.S. consumers struggling to recover from the economic slump. Simon has played a key role, becoming CEO of Wal-Mart’s U.S. division in 2010.
Prior to joining Wal-Mart as executive vice president of professional services in 2006, Simon held roles at companies including the U.S. restaurant company Brinker International Inc., Diageo Plc, the U.K. spirits maker, Cadbury Schweppes, PepsiCo Inc. and RJR Nabisco. He was secretary of the Florida Department of Management Services under then-Governor Jeb Bush. He also served 25 years in the U.S. Navy and Naval Reserves.
With Simon running the U.S. business, McMillon oversaw international operations. The company has been working to relaunch its “everyday low price” strategy in Brazil and China after struggling to find strong sales growth in both markets. In India, Wal-Mart has faced questions over lobbying.
McMillon, an Arkansas native, began his career with Wal-Mart in 1984 as a summer worker in a distribution center, according to the company’s website. He moved through the ranks, working in a variety of merchandising roles in the U.S. division, where he concentrated on food, apparel and general merchandise. Before taking the reins of the international division, McMillon ran Sam’s Clubs from 2006 to 2009.
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